Ivanhoe Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: current ratio = current assets/current liabilities. The firm's current assets are equal to $1,236,000, its accounts payable are $422,000, and its notes payable are $350,000. Its inventory is currently at $ 724,000. The company plans to raise funds in the shot - term debt market and invest the entire amount in additional inventory. How much can notes payable increase without the current ratio falling below 1.50?
Ivanhoe Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: current ratio = current assets/current liabilities. The firm's current assets are equal to $1,236,000, its accounts payable are $422,000, and its notes payable are $350,000. Its inventory is currently at $ 724,000. The company plans to raise funds in the shot - term debt market and invest the entire amount in additional inventory. How much can notes payable increase without the current ratio falling below 1.50?
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 8P
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![Ivanhoe Network Associates has a current ratio of 1.60, where the current ratio is defined as follows:
current ratio = current assets/current liabilities. The firm's current assets are equal to $1,236,000, its
accounts payable are $422,000, and its notes payable are $350,000. Its inventory is currently at $
724,000. The company plans to raise funds in the shot - term debt market and invest the entire amount in
additional inventory. How much can notes payable increase without the current ratio falling below 1.50?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc48780b6-6248-4276-8248-bd118d5e39d4%2F36be3b1e-37bd-4b1d-b430-ae7f32ed6d38%2F75o3kuk_processed.png&w=3840&q=75)
Transcribed Image Text:Ivanhoe Network Associates has a current ratio of 1.60, where the current ratio is defined as follows:
current ratio = current assets/current liabilities. The firm's current assets are equal to $1,236,000, its
accounts payable are $422,000, and its notes payable are $350,000. Its inventory is currently at $
724,000. The company plans to raise funds in the shot - term debt market and invest the entire amount in
additional inventory. How much can notes payable increase without the current ratio falling below 1.50?
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