Question

2- Current and Quick Ratios

The Nelson Company has $1,650,000 in current assets and $550,000 in current liabilities. Its initial inventory level is $385,000, and it will raise funds as additional notes payable and use them to increase inventory.

A) How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.2? Round your answer to the nearest cent. $

B) What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.

Answer #1

A) Current Asset = $1650000

Current liabilities= 550,000

Let Short term debt and increase in inventory = x

Current ratio = Current Asset / Current liabilities

1.2 = (1650,000+x) / (550,000 + x)

By cross multiplication

1.2 * (550,000 + x) = 1650,000 + x

660,000 + 1.2 x = 1650,000 + x

1.2x - x = 1650,000 - 660,000

x = 990,000 / 0.20

x = 4950,000

So, Short term debt and inventory has to be increased by 4950,000 to keep current ratio 1.2.

B) Current Asset = $1650,000

Inventory = $385,000 + 4950,000

= 5335,000

Current Liabilities after raising short term debt = 550000 + 4950,000

= 5500,000

Quick ratio = (Current asset - Inventory) / Current liabilites

= (6600000 -5335000) / 5500000

= 0.23

Quick ratio = 0.23

Current and Quick Ratios The Nelson Company has $1,260,000 in
current assets and $450,000 in current liabilities. Its initial
inventory level is $360,000, and it will raise funds as additional
notes payable and use them to increase inventory. How much can
Nelson's short-term debt (notes payable) increase without pushing
its current ratio below 1.9? Round your answer to the nearest cent.
$ What will be the firm's quick ratio after Nelson has raised the
maximum amount of short-term funds? Round...

eBook Problem 3-9 Current and Quick Ratios The Nelson Company
has $1,755,000 in current assets and $650,000 in current
liabilities. Its initial inventory level is $325,000, and it will
raise funds as additional notes payable and use them to increase
inventory. How much can Nelson's short-term debt (notes payable)
increase without pushing its current ratio below 1.2? Round your
answer to the nearest cent. $ What will be the firm's quick ratio
after Nelson has raised the maximum amount of...

eBook
Problem 3-9
Current and Quick Ratios
The Nelson Company has $1,687,500 in current assets and $675,000
in current liabilities. Its initial inventory level is $472,500,
and it will raise funds as additional notes payable and use them to
increase inventory.
How much can Nelson's short-term debt (notes payable) increase
without pushing its current ratio below 1.8? Round your answer to
the nearest cent.
$
What will be the firm's quick ratio after Nelson has raised the
maximum amount of...

Current and Quick Ratios
The Nelson Company has $1,080,000 in current assets and $400,000
in current liabilities. Its initial inventory level is $240,000,
and it will raise funds as additional notes payable and use them to
increase inventory.
How much can Nelson's short-term debt (notes payable) increase
without pushing its current ratio below 2.4? Round your answer to
the nearest cent.
$
What will be the firm's quick ratio after Nelson has raised the
maximum amount of short-term funds? Round...

Current and Quick Ratios The Nelson Company has $1,363,000 in
current assets and $470,000 in current liabilities. Its initial
inventory level is $330,000, and it will raise funds as additional
notes payable and use them to increase inventory. How much can
Nelson's short-term debt (notes payable) increase without pushing
its current ratio below 1.8? Do not round intermediate
calculations. Round your answer to the nearest dollar.
$
What will be the firm's quick ratio after Nelson has raised the
maximum...

Current and Quick Ratios
The Nelson Company has $1,228,500 in current assets and $455,000
in current liabilities. Its initial inventory level is $330,000,
and it will raise funds as additional notes payable and use them to
increase inventory. How much can Nelson's short-term debt (notes
payable) increase without pushing its current ratio below 2.0? Do
not round intermediate calculations. Round your answer to the
nearest dollar.
What will be the firm's quick ratio after Nelson has raised the
maximum amount...

Current and Quick Ratios
The Nelson Company has $1,260,000 in current assets and $450,000
in current liabilities. Its initial inventory level is $300,000,
and it will raise funds as additional notes payable and use them to
increase inventory. How much can Nelson's short-term debt (notes
payable) increase without pushing its current ratio below 2.0? Do
not round intermediate calculations. Round answer to the nearest
dollar.
$
What will be the firm's quick ratio after Nelson has raised the
maximum amount...

Current and Quick Ratios
The Nelson Company has $1,312,500 in current assets and $525,000
in current liabilities. Its initial inventory level is $360,000,
and it will raise funds as additional notes payable and use them to
increase inventory. How much can Nelson's short-term debt (notes
payable) increase without pushing its current ratio below 2.2? Do
not round intermediate calculations. Round your answer to the
nearest dollar. $
What will be the firm's quick ratio after Nelson has raised the
maximum...

The Nelson Company has $1,485,000 in current assets and $550,000
in current liabilities. Its initial inventory level is $425,000,
and it will raise funds as additional notes payable and use them to
increase inventory. How much can Nelson's short-term debt (notes
payable) increase without pushing its current ratio below 2.0? Do
not round intermediate calculations. Round your answer to the
nearest dollar.
$
What will be the firm's quick ratio after Nelson has raised the
maximum amount of short-term funds?...

The Nelson Company has $1,440,000 in current assets and $600,000
in current liabilities. Its initial inventory level is $480,000,
and it will raise funds as additional notes payable and use them to
increase inventory.
How much can Nelson's short-term debt (notes payable) increase
without pushing its current ratio below 1.9? Round your answer to
the nearest cent.
$
What will be the firm's quick ratio after Nelson has raised the
maximum amount of short-term funds? Round your answer to two...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 18 minutes ago

asked 21 minutes ago

asked 26 minutes ago

asked 27 minutes ago

asked 33 minutes ago

asked 36 minutes ago

asked 45 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago