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Airspot Motors, Inc. has $ 2,223,000 in current assets and $ 855,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short- term debt. How much can the firm increase its inventory without its current ratio falling below 2.2 (assuming all other current assets and current liabilities remain constant)?

Airspot Motors, Inc. has $ 2,223,000 in current assets and $ 855,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short- term debt. How much can the firm increase its inventory without its current ratio falling below 2.2 (assuming all other current assets and current liabilities remain constant)?

Essentials Of Investments
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
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Airspot Motors, Inc. has $ 2,223,000 in current assets and $ 855,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short- term debt. How much can the firm increase its inventory without its current ratio falling below 2.2 (assuming all other current assets and current liabilities remain constant)?
Transcribed Image Text:Airspot Motors, Inc. has $ 2,223,000 in current assets and $ 855,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short- term debt. How much can the firm increase its inventory without its current ratio falling below 2.2 (assuming all other current assets and current liabilities remain constant)?
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