(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 managerswant 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'scurrent ratio?The new current ratio is. (Round to one decimal place.)

The current ratio shows the paying capacity to meet short-term liabilities with the available amount…

Answered: The new current ratio is O: (Round to…

Business

Finance

The new current ratio is O: (Round to one decimal place.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

(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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