Current and Quick Ratios
The Nelson Company has $1,667,500 in current assets and $575,000
in current liabilities. Its initial inventory level is $287,500,
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 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 your answer to two
decimal places.
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