The King Carpet Company has $2,910,000 in cash and a total of $12,780,000 in current assets. The firm's current liabilities equal $5,940,000 such that the firm's current ratio equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,160,000 by paying $591,000 in cash to expand the firm's truck fleet and using $1,159,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?

The King Carpet Company has $2,910,000 in cash and a total of $12,780,000 in current assets. The firm's current liabilities equal $5,940,000 such that the firm's current ratio equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,160,000 by paying $591,000 in cash to expand the firm's truck fleet and using $1,159,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 7P

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