Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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(Liquidity Analysis) The King Carpet Company has $3,000,000 in cash and a total of $11,920,000 in current assets. The firm's current liabilities equal $6,300,000 such that the firm's current ratio equals 1.9. The company's managers
want to reduce the firm's cash holdings down to $1,160,000 by paying $543,000 in cash to expand the firm's truck fleet and using $1,297,000 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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Transcribed Image Text:(Liquidity Analysis) The King Carpet Company has $3,000,000 in cash and a total of $11,920,000 in current assets. The firm's current liabilities equal $6,300,000 such that the firm's current ratio equals 1.9. The company's managers want to reduce the firm's cash holdings down to $1,160,000 by paying $543,000 in cash to expand the firm's truck fleet and using $1,297,000 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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