Increasing other receivables boosts current assets and the ratio

Steps:

• Current ratio = current assets (CA) / current liabilities (CL); rising ratio indicates CA increasing or CL decreasing relative to each other.
• Other receivables are part of CA, so their increase raises the numerator.
• No change in CL is implied, isolating the effect to CA growth.
• This explains the steady upward trend from 2.3:1 to 2.5:1.

Why C is correct:

• Other receivables are current assets; increasing them directly increases the CA numerator in the current ratio formula, raising the overall ratio.

Why the others are wrong:

• A: Decreasing inventory reduces CA, lowering the numerator and ratio.
• B: Increasing other payables raises CL, increasing the denominator and lowering the ratio.
• D: Decreasing trade receivables reduces CA, lowering the numerator and ratio.

Final answer: C