Accounting for IGCSE & O level - Advanced Principles (Section 5 - No. 16)

How does an increase in accounts payable affect a company's current ratio, assuming all other factors remain constant?

Increases the current ratio

Decreases the current ratio

Has no impact on the current ratio

The impact depends on the size of the current assets

Accounts payable is a current liability. Increasing it decreases the current ratio.