The Artist Company has P1,312,500 in current assets and P525,000 in current liabilities. Its initial inventory level is P375,000 and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0?
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Problem 11 (
The Artist Company has P1,312,500 in current assets and P525,000 in current liabilities. Its initial inventory level is P375,000 and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0?
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- Problem C: Liquidity RatiosABC has P400,000 cash, P200,000 short‐term investments, P500,000 receivables, and P900,000 inventories. It has trade payables ofP600,000 and short‐term loans of P900,000. It is planning to acquire another short‐term loan. However, the first loan requires ABCto maintain a minimum current ratio of 125%.Required:10. Current ratio if ABC borrowed P300,00011. Current ratio if ABC borrows P600,00012. Maximum loan amount that ABC can borrow*Answer in percent rounded off to two decimal places, e.g. 125.33 for 125.33%.Problem C: Liquidity RatiosABC has P400,000 cash, P200,000 short‐term investments, P500,000 receivables, and P900,000 inventories. It has trade payables ofP600,000 and short‐term loans of P900,000. It is planning to acquire another short‐term loan. However, the first loan requires ABCto maintain a minimum current ratio of 125%. Required:9. Current ratio before additional loan*10. Current ratio if ABC borrowed P300,000*11. Current ratio if ABC borrows P600,000*12. Maximum loan amount that ABC can borrow*Answer in percent rounded off to two decimal places, e.g. 125.33 for 125.33%. ONLY NUMBER 12!! THANK YOUUUUProblem C: Liquidity RatiosABC has P400,000 cash, P200,000 short‐term investments, P500,000 receivables, and P900,000 inventories. It has trade payables ofP600,000 and short‐term loans of P900,000. It is planning to acquire another short‐term loan. However, the first loan requires ABCto maintain a minimum current ratio of 125%.Required:9. Current ratio before additional loan*10. Current ratio if ABC borrowed P300,000*11. Current ratio if ABC borrows P600,000*12. Maximum loan amount that ABC can borrow*Answer in percent rounded off to two decimal places, e.g. 125.33 for 125.33%.
- Problem C: Liquidity RatiosABC has P400,000 cash, P200,000 short‐term investments, P500,000 receivables, and P900,000 inventories. It has trade payables ofP600,000 and short‐term loans of P900,000. It is planning to acquire another short‐term loan. However, the first loan requires ABCto maintain a minimum current ratio of 125%.Required:1. Current ratio if ABC borrowed P300,0002. Current ratio if ABC borrows P600,0003. Maximum loan amount that ABC can borrow *Answer in percent rounded off to two decimal places, e.g. 125.33 for 125.33%.1 The Metro Bank loaned P40,000 to llocano Company. The loan is secured by inventory with a book and fair value of P50,000 and P30,000, respectively. What amount will the bank receive if unsecured creditors receive 25% of their claims?IA - Receivable Financing 10. Problem Solving. A company pledged its entire accounts receivable amounting to P2,500,000 to a financing institution to a loan approved for P2,000,000. The term of the loan requires the company to pay the principal when it becomes mature 4 years from now and also to pay 12% annual interest every end of the year. Should the company has made no collateral for the loan, interest rate could have been 18%. Assuming the transaction occurred on January 1, 20A, compute the total amount of expense that should be deducted from the current year’s income of the company. Round off final answer to the nearest peso.
- The firm's current ratio is 2.1. the firm plans to acquire additional inventory to meet a surge in the demand for its products and will pay for the inventory with short-term debt. How much inventory can the firm purchase without violating its debt agreement, to maintain the current ratio of 1.75 if their total current assets equal $3.5 million? a. 777,777 b. 437,500 c. 1 million d. 0Suppose the Schoof Company has this book value balance sheet: $30,000,000 Current assets Fixed assets Total assets Short-term debt Long-term debt Common equity Total capital $ 70,000,000 $ $100,000,000 Current liabilities Notes payable The notes payable are to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon nterest rate of 7%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this s the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Long-term debt Common stock (1…The firm's current ratio now is 2.1. The firm plans to acquire additional inventory to meet a surge in the demand for its products and will pay for the inventory with short-term debt. How much inventory can the firm purchase without violating its debt agreement, to maintain current ratio of 1.75 if their total current assets equal $3.5 million? $0 O $777,777 O $437.500 O $1 million
- | Suppose that FirstBank has the following simplified balance sheet. Assume that all other components of the balance sheet are equal to zero. Assets Liabilities reserves 3,920 demand deposits 32,000 loans 28,080 32,000 32,000 Assume that the reserve ratio is r= .10 (10%). a. Does FirstBank have excess reserves? If so, of how much? b. Suppose that FirstBank desires to hold no excess reserves, so it loans out its excess reserves to borrowers. How does the balance sheet change? Either use T-accounts or a new balance sheet to show. c. Starting back in a), what is the maximum deposit outflow that FirstBank can sustain without affecting other parts of the balance sheet?Problem 5. NGIWI Inc. has shown the following details as of yearend: AR P 200 000 Interest payable in 3 mos. 25 000 AP 80 000 Inventory 440 000 Bonds payable due in 10 yrs. 500 000 Land 800 000 Cash 100 000 Notes payable due in 6 mos. 250 000 NGIWI Inc. will use cash to pay 50% of the accounts payable. What will happen to the current ratio and the acid test/quick ratio? (Just indicate INCR/DECR)7. Wagner Inc. has $200 in current assets and $125 in current liabilities. Inventory before any changes is $40. Wagner wants to reduce short-term loans (a current liability) and hold less inventory. About how much can Wagner's short-term loans decline without pushing its current ratio above 2.0? a. ST-loans can fall by about $77 b. ST-loans can fall by about $155 c. ST-loans can fall by about $167 d. ST-loans can fall by about $17 e. ST-loans can fall by about $150 f. ST-loans can fall by about $50