Current and Quick Ratios
The Nelson Company has $1,155,000 in current assets and $525,000 in current liabilities. Its initial inventory level is $367,500, 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 1.5? 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.______________
Current Ratio = Current Asset / Current Liabilities