he Nelson Company has $1,170,000 in current assets and $450,000 in current liabilities. Its initial inventory level is $280,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 2.2? Do not round intermediate calculations. Round your answer to the nearest dollar. $ 150,000 What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Do not round intermediate calculations. Round your answer to two decimal places.

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Answer 1

The quick ratio after Nelson has raised the maximum amount of short-term funds will be 1.48.

What is quick ratio?

The quick ratio (also known as the acid-test ratio) is a measure of a company's short-term liquidity. It is calculated by dividing a company's total assets minus its inventory by its current liabilities. This ratio reveals a company's ability to pay its current liabilities with its most liquid assets. A quick ratio of 1:1 or higher is generally considered a sign of a financially healthy company, while a ratio lower than 1:1 may indicate that a company lacks the necessary liquidity to pay its current liabilities.

The quick ratio is calculated by dividing the sum of cash, cash equivalents, and marketable securities by the total current liabilities.

In this case, the total current liabilities will be $450,000 + $150,000 = $600,000.

The sum of cash, cash equivalents, and marketable securities will be $1,170,000 - $280,000 = $890,000.

The quick ratio will be $890,000 / $600,000 = 1.48.

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Related Questions

can I get a detailed explanation about accounting in grade 9 term 1​

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Answer:

Accounting Equation: The accounting equation is a fundamental concept in accounting. It states that assets equal liabilities plus equity. This means that everything a company owns (assets) is either financed by what it owes (liabilities) or by what its owners have put in (equity).

Double-Entry Accounting: Double-entry accounting is a system where every financial transaction has two equal and opposite entries, one on the debit side and one on the credit side. This system is used to ensure that the accounting equation remains balanced.

Financial Statements: Financial statements are reports that show the financial performance and position of a company. The three main financial statements are the balance sheet, income statement, and statement of cash flows.

Recording Transactions: Transactions are recorded in journals, which are then posted to ledgers. Journals record transactions in chronological order, while ledgers organize transactions by account.

Types of Accounts: Accounts can be categorized as assets, liabilities, equity, revenue, and expenses. Assets are resources that a company owns and can use to generate future economic benefits. Liabilities are obligations that a company owes to others. Equity represents the residual interest in the assets of a company after liabilities are deducted. Revenue is money earned by a company from its primary business activities. Expenses are the costs incurred in earning revenue.

These are just a few of the concepts that you may learn in grade 9 accounting. Accounting can be a challenging subject, but with practice and dedication, you can master it.

Explanation:

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1. The well-known company McDonald's brand promise is to provide fast, affordable, and reliable food to their customers.

What is food ?

Food is any substance consumed to provide nutritional support for an organism. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals. The substance is ingested by an organism and assimilated by the organism's cells to provide energy, maintain life, or stimulate growth.

2a. The type of company I would like to work for or start up myself is a home decor store. 2b. Company's target customers could be grouped into two categories. 2c. The company could treat these two categories of customers differently by offering discounts.d.Type of channel management described in questions 2b and 2c is not likely to lead to unfair treatment .

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Which process includes determining the project’s course of action?

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Answer:

I think it's the Control Scope Process.

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Why do lending and credit card companies use a borrower's Social Security number when opening an account?

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Answer:

Most card issuers in the United States will request credit card applicants to provide a Social Security number (SSN). This helps credit card companies prevent fraud and protects the general public from identity theft.

Explanation:

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Lending and credit card companies use a borrower's Social Security number as a unique identifier to verify their identity and maintain accurate records, and to evaluate their creditworthiness.

What are the lending and credit card?

Lending refers to the practice of providing money or other resources to an individual or organization, typically in the form of a loan, with the expectation that the borrower will repay the amount with interest over a set period of time.

Lending can take various forms, including personal loans, mortgages, auto loans, and business loans, among others. Lending institutions, such as banks, credit unions, and online lenders, provide these types of loans.

A credit card, on the other hand, is a type of revolving credit that allows individuals to borrow money up to a certain limit, typically based on their creditworthiness, and use it to make purchases or pay bills.

The borrower is required to make at least a minimum payment each month and can choose to carry a balance from month to month, with interest charged on the outstanding balance. Credit cards are typically issued by banks or other financial institutions, and may come with various rewards or benefits, such as cashback or points for purchases.

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