The Nelson Company has $1,312,500 in current assets and $525,000 in current liabilities. Its nitial inventory level is $375,000, and it will raise funds as additional notes payable and use them o increase inventory. Suppose the values for this problem change to: Current Assets: $1,374,184

The Nelson Company has $1,312,500 in current assets and $525,000 in current liabilities. Its nitial inventory level is $375,000, and it will raise funds as additional notes payable and use them o increase inventory. Suppose the values for this problem change to: Current Assets: $1,374,184

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 2STP

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Question

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The Nelson Company has $1,312,500 in current assets and $525,000 in current liabilities. Its
initial inventory level is $375,000, and it will raise funds as additional notes payable and use them
to increase inventory.
Suppose the values for this problem change to:
Current Assets: $1,374,184
Current Liabilities: $508,895
Initial Inventory: $393,390
Maximum Allowable Current Ratio: 2
What will be the firm's quick ratio after raising the maximum amount of short-term funds? Roud
your solution to two decimals, i.e. you would enter 12.3456789 as 12.35.

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