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Allied Biscuit Company's Chief Financial Officer (CFO) has decided to take a closer look at the firm's short-term assets and liabilities. ABC's balance sheet follows:
Allied Biscuit Company's Chief Financial Officer (CFO) has decided to take a closer look at the firm's short-term assets and liabilities. ABC's balance sheet follows: Allied Biscuit Company (ABC) Balance Sheet Cash $1,187,500 $2,850,000 Accounts payable Accruals Accounts receivable $4,156,250 $1,781,250 Inventory $6,531,250 Notes payable $2,493,750 Total current assets $11,875,000 Total current liabilities $7,125,000 Long-term debt $7,875,000 Total debt $15,000,000 $3,000,000 Net plant and equipment $13,125,000 Common equity Retained earnings Total equity $7,000,000 $10,000,000 Total assets $25,000,000 Total liabilities and equity $25,000,000 The value of ABC's net working capital is And, ABC's current ratio is Assume that Allied Biscuit Company decides to acquire an additional $1,250,000 in inventories and pay using its accounts payable. Given the condition of the company noted in the balance sheet, this activity should be expected to cause ABC's current ratio to
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