Answer: current ratio than if the write-down had not occurred.

## Explanation When a manufacturing company writes down inventory to its net realizable value: 1. **Effect on Cost of Sales**: A write-down increases cost of sales in the period when it occurs, not decreases it. The write-down amount is recognized as an expense (cost of sales), so cost of sales would be higher than if the write-down had not occurred. 2. **Effect on Current Ratio**: The current ratio (Current Assets / Current Liabilities) decreases because: - Inventory (a current asset) is reduced by the write-down amount - Current liabilities remain unchanged - Therefore, the numerator decreases while denominator stays the same, resulting in a lower current ratio 3. **Effect on Inventory Turnover**: Inventory turnover (Cost of Sales / Average Inventory) would likely increase because: - Cost of sales increases due to the write-down - Average inventory decreases due to the write-down - Both changes work to increase the turnover ratio **Key Accounting Treatment**: - The write-down reduces inventory on the balance sheet - The reduction is recognized as an expense in cost of sales on the income statement - This reduces both net income and inventory value Therefore, the correct answer is B - a lower current ratio than if the write-down had not occurred.

Author: LeetQuiz .