Question: TealCap Manufacturing, Inc. is planning to increase its average inventory balance by taking out a short - term loan ( i . e . ,

TealCap Manufacturing, Inc. is planning to increase its average inventory balance by taking out a short

-

term loan

(

.

.,

increase notes payable

)

and buying additional inventory. The company believes that this event will have no effect on either sales or costs, and therefore no effect on net income.

All else constant, this new policy should cause the firm's quick ratio

(

assuming an initial quick ratio of

0.7)

to:

Increase

Decrease

No Change

Not enough information is provided to answer this question.

TealCap Manufacturing, Inc. is planning to increase its average inventory balance

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Please explain thoroughly Problem 1 RedCap Manufacturing, Inc. is planning to increase its average inventory balance by taking out a short-term loan (i.e., increase notes payable) and buying...

What impact (increase, decrease or no change) would each of the following activities have on a firm's debt ratio (assuming the debt ratio of the firm is currently 40%)? For each activity, assume that...

CORRECTLY ANSWERSED You and your team work for an educational institution that has 5 campuses and over 40,000 students. Since March 2020, all campuses were closed due to COVID-19 virus presence in...

...Consider a forward start option which, 1 year from today, will give its owner a 1-year European call option with a strike price equal to the stock price at that time. You are given: (i) The...

1) Assume that your firm has ROA of 20.5%, ROE of 42% and Total Asset Turnover ratio of 3.5. Calculate the debt ratio for the firm. (Enter answer as a percent). USE THE DATA IN THE TABLE BELOW TO...

8. Consider the following financial statement data submitted in conjunction with a loan request. Current assets = $1.2 billion Current liabilities = $1.5 billion Total assets = $3.8 billion Total...

9. Which of the following actions would decrease the current ratio (assuming an initial current ratio of 0.8, and current liabilities equal to $1,000,000)? a. Borrow $100,000 in short term debt and...

Page 20. 20 2020 S000 195.00 2.000 2019 2019 Current Assets Cussent liabilities Cash 500 300000 Accounts Payable 30000 Marketable securities 2000.0 10000 Short term loan Accounts peceivables 60000...

10. RedCap Manufacturing, Inc. is planning to borrow money by taking out a short term loan (Le, increase notes payable) and depositing this money directly into the rm 5 checking account (i.e.,...

13. RedCap Manufacturing, Inc. is planning to borrow money by taking out a short term loan (i.e increase notes payable) and depositing this money directly into the firm's checking account (i.e.,...

A furniture company manufactures desks and chairs. Each desk uses four units of wood, and each chair uses three units of wood. A desk contributes $400 to profit, and a chair contributes $250....

A psychiatrist wondered how much a nights sleep could affect a persons alertness and reaction time. She collected a random sample of people and asked them (X) how many hours of sleep they got the...

Plot the position of the following firms on Figure 13.6: Procter & Gamble, IBM, Apple, Coca-Cola, Dow Chemical, Intel, and McDonalds. In each case, justify your answer.

These macroenvironmental forces influence business ( marketing ) decisions: Globalization Organizational Geological Political

4.32 For a binomial probability distribution with P = 0.3 and n = 14, find the probability that the number of successes is equal to 7 and the probability that the number of successes is fewer than 6.

4.29 An investor is considering three strategies for a $1,000 investment. The probable returns are estimated as follows: Strategy 1: A profit of $10,000 with probability 0.15 and a loss of $1,000...

4.26 Students in a large accounting class were asked to rate the course by assigning a score of 1, 2, 3, 4, or 5 to the course. A higher score indicates that the students received greater value from...