eBook Problem Walk-Through

Current and Quick Ratios

The Nelson Company has $1,512,000 in current assets and $540,000 in current liabilities. Its initial inventory level is $395,000, 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 1.8? Do not round intermediate calculations. Round your answer to the nearest dollar.

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What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Do not round intermediate calculations. Round your answer to two decimal places.