Problem 11 (Current Ratio) The Artist Company has P1,312,500 in current assets, and P525,000 in current liabilities. Its initial inventory level is P375,000 and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Problem 11 (Current Ratio)
The Artist Company has P1,312,500 in current assets and P525,000 in current
liabilities. Its initial inventory level is P375,000 and it will raise funds as additional
notes payable and use them to increase inventory. How much can its short-term
debt (notes payable) increase without pushing its current ratio below 2.0?
Transcribed Image Text:Problem 11 (Current Ratio) The Artist Company has P1,312,500 in current assets and P525,000 in current liabilities. Its initial inventory level is P375,000 and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0?
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