Question

Aylward Inc. currently has ​$2,175,000 in current assets and ​$839,000 in current liabilities. The​ company's managers want to increase the​ firm's inventory, which will be financed by a​ short-term note with the bank. What level of inventories can the firm carry without its current ratio falling below 2.1? The cost of the additional inventory financed with the​ short-term note is? -----(Round to the nearest​ dollar.)

Answer 1

Answer--$ 375,510

The amount increase in current assets will be equal to amount increase in current liabilities due to Short term notes payable.

	Current assets	current liabilities	Current ratio
	$ 21,75,000.00	$    8,39,000.00	2.59
Increase in inventories	$    3,75,510.00	$    3,75,510.00
Updated balances	$ 25,50,510.00	$ 12,14,510.00	2.10

The amount ($375,510) is in approx. It could also be taken as $375,500 , answer will be same .