Is there anyway you can show me the work for these two problems. Thank-You The C

Question

Is there anyway you can show me the work for these two problems. Thank-You The Carlson Company has $2,625,000 in current assets and $1,050,000 in current liabilities. Its initial inventory level is $750,000, and it will raise funds as additional notes payable and use them to increase inventory How much can Carlson's short-term debt (notes payable) increase without pushing its current ratio below 2.0? a. 615,000 b. 585,000 700,000 d.) 525,000 e. None of the above Consider the above. What will be the firm's quick ratio after Carlson has raised the maximum amount of short-term funds? a. 1.26 b. 1.06 c. 1.15 d. 1.12 None ofthe above

Explanation / Answer

Q1) Answer :

Additional Notes to be Raised = 2,62,500 $

Based above calcutions i think correct answer is None of the above i.e option (e).

But here marked answer is Option (d) it is arrived is as follows

Current assets - 2 * current liabilities

26,25,000- (2*10,50,000) = 5,25,000

Q2) Answer :

= (26,25,000 - 7,50,000) / (10,50,000+262500) = 1.428571

Answer is Option (e)

If incase additional notes payable taken as 5,25,000

Then Quick Ratio = 1.19046

If u have further clarification please ask me

i think i hope that u r satisfied with this solution

Let additional notes to be raised = X Current ratio to be maintained = 2 Current ratio = Current assets / current Liabilities Then 26,25,000 / (10,50,000+X) = 2    10,50,000 + X = 13,12,500     X = 2,62,500

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