The King Carpet Company has $3,030,000 in cash and a total of $11,960,000 in current assets.
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Question:
The King Carpet Company has
$3,030,000
in cash and a total of
$11,960,000
in current assets. The firm's current liabilities equal
$6,920,000
such that the firm's current ratio equals
1.7.
The company's managers want to reduce the firm's cash holdings down to
$1,140,000
by paying
$540,000
in cash to expand the firm's truck fleet and using
$1,350,000
in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?
Question content area bottom
Part 1
What is the new current ratio?
Related Book For
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin
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