Question

Problem 3.19 Cullumber Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: Current ratio - Current assets/Current liabilities. The firm's current assets are equal to $1,233,265, its accounts payable are $419,357, and its notes payables are $351,663. Its inventory is currently at $721,599. The company plans raise funds in the short-term debt market and invest the entire amount in additional inventory. H notes pay Round final answer to the nearest whole dollar, eg. 5,275.) yable increase without the current ratio falling below 1.437 (Do not round intermediate calculations Notes payable can increase by

Answer 1

formula used in the excel sheet:

New notes payable for a current ratio of 1.43 = (CA -NP-(1.43*AP))/(1.43-1)

Where;

CA = current assets

NP = notes payable earlier

AP = accounts payable given

1.43 = current ratio required