Question: The Mitchem Marble Company has a target current ratio of
The Mitchem Marble Company has a target current ratio of 2.0 but has experienced some difficulties financing its expanding sales in the past few months. At present, the firm has current assets of $ 2.5 million and a current ratio of 2.5. If Mitchem expands its receivables and inventories using its short- term line of credit, how much additional short- term funding can it borrow before its current ratio standard is reached?
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