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The King Carpet Company has $3000000 in cash and a total of $12000000 in current assets The firms current liabilities equal $6000000 such that the firms current ratio equals 2 The companys

The King Carpet Company has $3,000,000 in cash and a total of $12,000,000 in current assets. The firm’s current liabilities equal $6,000,000 such that the firm’s current ratio equals 2. The company’s managers want to reduce the firm’s cash holdings down to $1,000,000 by paying $500,000 in cash to expand the firm’s truck fleet and using $1,500,000 in cash to retire a short-term note. If they carry this plan through, what will happen to the firm’s current ratio?

 

May 23 2020 View more View Less

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