(Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,530,000 in current assets. The firm's current liabilities equal $5,920,000 such that the firm's current ratio equals 1.9. The company's managers want to reduce the firm's cash holdings down to $1,140,000 by paying $540,000 in cash to expand the firm's truck fleet and using $1,280,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio? The new current ratio is (Round to one decimal place.)
(Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,530,000 in current assets. The firm's current liabilities equal $5,920,000 such that the firm's current ratio equals 1.9. The company's managers want to reduce the firm's cash holdings down to $1,140,000 by paying $540,000 in cash to expand the firm's truck fleet and using $1,280,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio? The new current ratio is (Round to one decimal place.)
Chapter7: Valuation Of Stocks And Corporations
Section: Chapter Questions
Problem 1nM
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![(Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,530,000 in current assets. The firm's current liabilities equal $5,920,000 such that the firm's current ratio equals 1.9.
The company's managers want to reduce the firm's cash holdings down to $1,140,000 by paying $540,000 in cash to expand the firm's truck fleet and using $1,280,000 in cash to retire a short-term note. If they
carry this plan through, what will happen to the firm's current ratio?
The new current ratio is
(Round to one decimal place.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fefefaa0f-c122-41a6-ac84-5a9e56f602e5%2F8b524990-887d-4c4b-a2ef-a0ddf6242891%2Fuda2iit_processed.png&w=3840&q=75)
Transcribed Image Text:(Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,530,000 in current assets. The firm's current liabilities equal $5,920,000 such that the firm's current ratio equals 1.9.
The company's managers want to reduce the firm's cash holdings down to $1,140,000 by paying $540,000 in cash to expand the firm's truck fleet and using $1,280,000 in cash to retire a short-term note. If they
carry this plan through, what will happen to the firm's current ratio?
The new current ratio is
(Round to one decimal place.)
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