The top management of Palermo Marketing Services examines the following company accounting records at August 29, immediately before the end of the company’s year, August 31:

Total current assets ..................... $ 324,500
Noncurrent assets........................ 1,086,000
                                                        $1,410,500
Total current liabilities ................ $ 173,500
Noncurrent liabilities ..................   253,400
Common stockholders’ equity..... 983,600
                                                       $1,410,500

1. Suppose Palermo’s management wants to achieve a current ratio of 3. How much in current liabilities should Palermo pay off within the next two days in order to achieve its goal?

2. Calculate Palermo’s leverage ratio and debt ratio ignoring Requirement 1. Use year-end figures in place of averages where needed for the purpose of calculating ratios in this exercise. Evaluate the company’s debt position. Is it low, high, or about average? What other information might help you to make a decision?