Problem 3-9 Current and Quick Ratios

The Nelson Company has $1,875,000 in current assets and $625,000 in current liabilities. Its initial inventory level is $437,500, and it will raise funds as additional notes payable and use them to increase inventory.

1. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.7? Round your answer to the nearest cent.
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2. What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.