Question
(Liquidity Analysis) The King Carpet Company has $3,020,000 in cash and a total of $11,570,000 in current assets. The firm's current liabilities equal $6,560,000
(Liquidity Analysis) The King Carpet Company has $3,020,000 in cash and a total of $11,570,000 in current assets. The firm's current liabilities equal $6,560,000 such that the firm's current ratio equals 1.8. The company's managers want to reduce the firm's cash holdings down to $1,090,000 by paying $553,000 in cash to expand the firm's truck fleet and using $1,377,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio? The new current ratio is . (Round to one decimal place.)
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