Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Crane Housing PLC has a current ratio of 2.5 and total current assets worth 5 mil- lion. Crane Housing also has some long-term borrowings where

Crane Housing PLC has a current ratio of 2.5 and total current assets worth 5 mil- lion. Crane Housing also has some long-term borrowings where the bank has stipulated that the current ratio of the firm should not drop below 1.5. Management has planned to take on a new housing project in Birmingham, which will increase the inventory by 3 million. The firms plan to fund this inventory by increasing accounts payable. Explain whether the firm will be able to follow this plan. Suggest any alternative sources to fund this increase in inventory without affecting the current ratio.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions