Collection of sundry debtors would _______________.

Increase current ratio

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Decrease current ratio

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Have no effect on current ratio

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Increase debtors turnover

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Solution

The correct option is C Have no effect on current ratio
Current ratio measures the liquidity of the firm and also checks the ability of an organisation to repay to current debts. The ratio is calculated by comparing the current assets with current liabilities.
Collection of sundry debtors would increase cash inflow and reduce the amount of debtors and hence there is nil affect or say no change in the Current assets. Thereby, having no effect on the current ratio.

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