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Please answer both parts of the question, and provide detail The Nelson Company has $1,495,000 in current...

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Finance

Please answer both parts of the question, and provide detail

The Nelson Company has $1,495,000in current assets and $650,000 in current liabilities. Its initialinventory level is $455,000, and it will raise funds as additionalnotes payable and use them to increase inventory.

1. How much can Nelson'sshort-term debt (notes payable) increase without pushing itscurrent ratio below 1.4? Round your answer to the nearestcent.

2. What will be the firm's quickratio after Nelson has raised the maximum amount of short-termfunds? Round your answer to two decimal places.

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4.1 Ratings (574 Votes)
Nelsons shortterm debt notes payable Let X Taken as amount of money borrowed through shortterm notes payable and the same was used to purchase inventory Therefore    See Answer
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Please answer both parts of the question, and provide detailThe Nelson Company has $1,495,000in current assets and $650,000 in current liabilities. Its initialinventory level is $455,000, and it will raise funds as additionalnotes payable and use them to increase inventory.1. How much can Nelson'sshort-term debt (notes payable) increase without pushing itscurrent ratio below 1.4? Round your answer to the nearestcent.2. What will be the firm's quickratio after Nelson has raised the maximum amount of short-termfunds? Round your answer to two decimal places.

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