Problem 3-9

Current and Quick Ratios

The Nelson Company has $1,522,500 in current assets and $525,000 in current liabilities. Its initial inventory level is $262,500, and it will raise funds as additional notes payable and use them to increase inventory.

1. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 2.3? Round your answer to the nearest cent.

$

1. What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.