The long term bank loan extended to Company P is dependent on their quick (acid test) ratio improving. They have to achieve a ratio of 1:1.8 by the end of the month. They currently predict that current assets and liabilities at that time will be: $(000) Cash held at bank 30 Inventory 75 Trade receivables 25 Trade payables 35 The company is considering adjusting the size of its planned payment to trade payables in order to hit the target ratio. If the company achieves this, then what will be the new payables balance in $(000)?

Answer rating: 100% (QA)

To calculate the new payables balance we need to first determine the current quick ratio and then ad... View the full answer