Question
Sheffield's Furniture has $1,700,000 in current assets and $660,000 in current liabilities. Its initial inventory level...
Sheffield's Furniture has $1,700,000 in current assets and $660,000 in current liabilities. Its initial inventory level is $970,000, 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 2.5?
| a. |
$50,000 |
|
| b. |
$20,000 |
|
| c. |
$613,333 |
|
| d. |
$33,333 |
|
| e. |
$368,000 |
Homework Answers
Answer #1
✓ d) $ 33333
Short term debt can be increased $ 33333 without pushing it's current ratio below 2.5
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