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Aaron Brother has the following balance sheet: Current assets $7,000 A/P & Accruals $1,500 Net property & plants 3,000 Notes Payables 2,000 Common Stock 1,500

Aaron Brother has the following balance sheet:

Current assets $7,000 A/P & Accruals $1,500

Net property & plants 3,000 Notes Payables 2,000

Common Stock 1,500

Ret. Earnings 5,000

Total assets $10,000 Total liab. + Equity $10,000

Aaron Brother after-tax profit margin is 10 percent, and the company pays out 40 percent of its earnings as dividends. Its sales this year were $10,000; its assets were used to full capacity and the profit margin and payout ratio are expected to remain constant. The company plans to raise capital using short-term (3-months) loans (or Notes Payables) for its additional fund needed. If sales is expected to grow by 30 percent, what will Aaron Brother's current ratio be after it has raised the necessary capital and financing it with Notes Payables?

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