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What will be effect in the current and quick ratio after this? Sells a vacant lot for $20,000 that had been used in its operations.
Thank you for explaining that. So if the company uses the proceeds to pay off debts, how will that affect the ratios?
If the company uses the $20,000 to pay off debts, it will improve its current and quick ratios. This is because the company's current liabilities will decrease and its current assets will stay the same, thus increasing the ratios.