Answer (C) is correct. The current ratio is the ratio of current assets to current liabilities. When the ratio is greater than one, any change of equal dollar amount on both the numerator and denominator will result in a lowering of the overall ratio (since the denominator will increase by a proportionally greater amount). The purchase of merchandise on credit is an example of such a change: Inventory increases in the numerator and
accounts payable increases in the denominator by an equal dollar amount.