The Nelson Company has $1,210,000 in current assets and $550,000 in current liab

Question

The Nelson Company has $1,210,000 in current assets and $550,000 in current liabilities. Its initial inventory level is $440,000, 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 1.3? 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. x

Explanation / Answer

Hi, If you like my answer rate me lifesaver first...that way only I can earn points. Thanks Let the amount of short term debt be SD. Amount of Inventory purchased will also be = SD so , as per problem (1,1210000 + SD)/ (550000 + SD) >=1.3 or SD

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