The Petry Company has $1,312,500 in current assets and $525,000 in current liabilities. Its initial inventory level
Question:
The Petry Company has $1,312,500 in current assets and $525,000 in current liabilities. Its initial inventory level is $375,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Petry’s short-term debt (notes payable) increase without pushing its current ratio below 2.0? What will be the firm’s quick ratio after Petry has raised the maximum amount of short-term funds?
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Shortterm debt can increase by a maximum of 262500 w...View the full answer
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Related Book For 
Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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