The King Carpet Company has $3,110,000 in cash and a total of $11,430,000 in current assets. The firm's current liabilities equal $5,550,000 such that the firm's current ratio equals 2.1. The company's managers want to reduce the firm's cash holdings down to $1,040,000 by paying $579,000 in cash to expand the firm's truck fleet and using

$1,491,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?

Answer rating: 100% (QA)

ANSWER First lets find the firms current assets excluding cash after the proposed reduction in cash ... View the full answer