(Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,980,000 in current assets. The firm's current liabilities equal $5,050,000 such that the firm's current ratio equals 2.4. The company's managers want to reduce the firm's cash holdings down to $1,070,000 by paying $524,000 in cash to expand the firm's truck fleet and using $1,366,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?

(Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,980,000 in current assets. The firm's current liabilities equal $5,050,000 such that the firm's current ratio equals 2.4. The company's managers want to reduce the firm's cash holdings down to $1,070,000 by paying $524,000 in cash to expand the firm's truck fleet and using $1,366,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?

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Description: (Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,980,000 in current assets.The firm's current liabilities equal $5,050,000 such that the firm's current ratio equals 2.4. The company's managerswant to reduce the

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 20P

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