(Liquidity Analysis) The King Carpet Company has $2,860,000 in cash and a total of $11,910,000 in current assets. The firm's current liabilities equal $5,760,000 such that the firm's current ratio equals 2.1. The company's managers want to reduce the firm's cash holdings down to $1,170,000 by paying $535,000 in cash to expand the firm's truck fleet and using $1,155,000 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 $2,860,000 in cash and a total of $11,910,000 in current assets. The firm's current liabilities equal $5,760,000 such that the firm's current ratio equals 2.1. The company's managers want to reduce the firm's cash holdings down to $1,170,000 by paying $535,000 in cash to expand the firm's truck fleet and using $1,155,000 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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Transcribed Image Text:(Liquidity Analysis) The King Carpet Company has $2,860,000 in cash and a total of $11,910,000 in current assets.
down to $1,170,000 by paying $535,000 in cash to expand the firm's truck fleet and using $1,155,000 in cash to retire
The new current ratio is
(Round to one decimal place.)
The firm's current liabilities equal $5,760,000 such that the firm's current ratio equals 2.1. The company's managers want to reduce the firm's cash holdings
short-term note. If they carry this plan through, what will happen to the firm's current ratio?
C
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