The King Carpet Company has $2,820,000 in cash and a total of $11,170,000 in current assets. The firm's current liabilities equal $6,560,000 such that the firm's current ratio equals 1.7. The company's managers want to reduce the firm's cash holdings down to $1,010,000 by paying $576,000 in cash to expand the firm's truck fleet and using $1,234,000 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______?
The King Carpet Company has $2,820,000 in cash and a total of $11,170,000 in current assets. The firm's current liabilities equal $6,560,000 such that the firm's current ratio equals 1.7. The company's managers want to reduce the firm's cash holdings down to $1,010,000 by paying $576,000 in cash to expand the firm's truck fleet and using $1,234,000 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______?
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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The King Carpet Company has $2,820,000 in cash and a total of $11,170,000 in current assets. The firm's current liabilities equal $6,560,000 such that the firm's current ratio equals
1.7. The company's managers want to reduce the firm's cash holdings down to $1,010,000 by paying $576,000 in cash to expand the firm's truck fleet and using $1,234,000 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______?
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