(Liquidity Analysis) The King Carpet Company has $2,830,000 in cash and a total of $11,300,000 in current assets. The firm's current liabilities equal $5,040,000 such that the firm's current ratio equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,100,000 by paying $564,000 in cash to expand the firm's truck fleet and using $1,166,000 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.)
(Liquidity Analysis) The King Carpet Company has $2,830,000 in cash and a total of $11,300,000 in current assets. The firm's current liabilities equal $5,040,000 such that the firm's current ratio equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,100,000 by paying $564,000 in cash to expand the firm's truck fleet and using $1,166,000 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.)
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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How i find the decrease in cash?
Transcribed Image Text:(Liquidity Analysis) The King Carpet Company has $2,830,000 in cash and a total of $11,300,000 in current assets. The firm's current liabilities equal $5,040,000 such that the firm's current ratio
equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,100,000 by paying $564,000 in cash to expand the firm's truck fleet and using $1,166,000 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:CURRENT ASSETS-
CURRENT RATIO = DECREASE IN CASH
CURRENT LIABILITIES-DECREASE IN
SHORT-TERM NOTES
11300000-
15040000-1166000
2.2
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