Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Thomas Corporation has the following (simplified) balance sheet: $25,000 Current Liabilities 75,000 50,000 Long-term Debt 100,000 Common Equity 250,000 Total Cash Inventory Accounts Receivable Net
Thomas Corporation has the following (simplified) balance sheet: $25,000 Current Liabilities 75,000 50,000 Long-term Debt 100,000 Common Equity 250,000 Total Cash Inventory Accounts Receivable Net Fixed Assets Total $62,500 87,500 100,000 250,000 This year's cost of goods sold was $300,000. The president of the company thinks inventory is too high. She wants to reduce inventory to the point where the inventory turnover is 5. The freed up cash will be used to reduce current liabilities. After this is done what will be the firm's new current ratio
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started