(Liquidity Analysis) The King Carpet Company has $3,150.000 in cash and a total of $12,480,000 in curent assets. The firm's current liabilities equal $6,670,000 such that the firm's cument ratio equals 1.9 The company's managers want to reduce the firm's cash holdings down to $1,040,000 by paying $556.000 e cash to expand the fem's truck feet and using $1,554,000 in cash to retire a short temnote if they carry this plan through what will happen to the firm's current rato? The new current ratio is (Round to one decimal place)

(Liquidity Analysis) The King Carpet Company has $3,150.000 in cash and a total of $12,480,000 in curent assets. The firm's current liabilities equal $6,670,000 such that the firm's cument ratio equals 1.9 The company's managers want to reduce the firm's cash holdings down to $1,040,000 by paying $556.000 e cash to expand the fem's truck feet and using $1,554,000 in cash to retire a short temnote if they carry this plan through what will happen to the firm's current rato? The new current ratio is (Round to one decimal place)

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Description: (Liquidity Analysis) The King Carpet Company has $3,150.000 in cash and a total of $12,480,000 in curent assets. The firm's current liabilities equal 56,670,000 such that the firm's current ratio equals 1.9.The company's managers want to reduce the

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 8P

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The King Carpet Company has $2,910,000 in cash and a total of $12,780,000 in current assets. The firm's current liabilities equal $5,940,000 such that the firm's current ratio equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,160,000 by paying $591,000 in cash to expand the firm's truck fleet and using $1,159,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?
Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets and $1 million in current liabilities. The firm currently pays out 75 percent of its net income to shareholders. Assume that all assets and current liabilities are expected to grow with sales. If Goldilochs does not want to rely on any external sources of funds, what is the most sales can grow (in chars)? $187,900 $299,900 $328,800 $364,100
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(Related to Checkpoint 4.1) (Liquidity analysis) Airspot Motors, Inc. has $2,517,200 in current assets and $868,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short-term debt. How much can the firm increase its inventory without its current ratio falling below 2.1 (assuming all other current assets and current liabilities remain constant)? Airspot Motors, Inc. could add up to $ in inventories. (Round to the nearest dollar.)
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Longhorn, Incorporated, has produced rodeo supplies for over 20 years. The company currently has a debt-equity ratio of 55 percent and the tax rate is 23 percent. The required return on the firm’s levered equity is 14 percent. The company is planning to expand its production capacity. The equipment to be purchased is expected to generate the following unlevered cash flows: Year Cash Flow 0 −$ 18,400,000 1 5,740,000 2 9,540,000 3 8,840,000 The company has arranged a debt issue of $9.42 million to partially finance the expansion. Under the loan, the company would pay interest of 9 percent at the end of each year on the outstanding balance at the beginning of the year. The company also would make year-end principal payments of $3,140,000 per year, completely retiring the issue by the end of the third year. What is the APV of the project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)
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Airspot Motors, Inc. has $2,343,600 in current assets and $868,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short-term debt. How much can the firm increase its inventory without its current ratio falling below 2.1 (assuming all other current assets and current liabilities remain constant)?