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Your firm successfully issued new debt last​ year, but the debt carries covenants.​ Specifically, you can...

Your firm successfully issued new debt last​ year, but the debt carries covenants.​ Specifically, you can only pay dividends out of earnings made after the debt issue and you must maintain a minimum quick​ (acid-test) ratio

(Current Assets - Inventory) / Current Liabilities

of 1.2. Your net income this year was $ 69.8 million. Your cash is $ 9.6 ​million, your receivables are $ 8.3 ​million, and your inventory is $ 5.1 million. You have current liabilities of $ 19.1 million. What is the maximum dividend you could pay​ (in cash and in​ stock) this year and still comply with your​ covenants?

Round to one decimal place

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Answer #1

Therefore, Cash = 63,50,000

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