You are the Finance Manager of a corporation. The Board of Directors has noticed TIs current ratio is well below 1.5 industry average. You are asked by the Board of Directors to evaluate the financial impacts of raising current ratio to 1.5 or higher. Specifically, you are asked to evaluate the impact of higher current ratio in the following areas (assuming everything else remain constant e.g., sales, profit margin etc).

Free Cash Flow (FCF): Likely increase / decrease / no change?

[max 30 words]

Sustainable Growth Rate: Any change (higher or lower) because of higher current ratio?

[max 30 words]

Impact on Economic Value Added (EVA) with higher current ratio and in what direction higher or lower and why?

[max 50 words]

Traders' Inc. Partial Bb AIR Inventory so Ale 200 CA 150 CL ZOD 500 Management wants to increase Current ratio to 165 and above. Traders' Inc. Partial Bb AIR Inventory so Ale 200 CA 150 CL ZOD 500 Management wants to increase Current ratio to 165 and above