Rdti Ldwson9717/18 11:31 PM Homework: chapter 4 Save HW Score: 44.64%, 3.13 of 7

Question

Rdti Ldwson9717/18 11:31 PM Homework: chapter 4 Save HW Score: 44.64%, 3.13 of 7 pt Question Help * Score: 0 of 1 pt 5 of 7 (4 complete) Problem 4-5 (similar to) (Evaluating liqusidity) The Allen Marble Company has a target current ratio of 20 but has experienced some difficulties financing ts expanding sales in the past few credit, how much additional short-term funding can it borrow before its current ratio standard is reached? The addition to current assets is (Round to the nearest dollar ) current ratio of 27. If Alen expands its recelvables and inventories using its short-term line of and a Enter your answer in the answer box and then click Check Answer All parts showing

Explanation / Answer

Current ratio = current asset/ current liabilities

Current liabilities = current asset/ current ratio

= $2,700,000/2.7 = $1,000,000

Desired current ratio of 2:

current ratio = current asset /current liablilites

2=2,700,000/current liabilties

Current liabilities = 2700000/2

Current laibilties = 1,350,000

Current liabilties or short term fund required for reaching the desired ratio of 2 is 350,000(1350000-1000000)

additional fund required = 350000

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