Answer:
Step-by-step explanation:
$1,250,000 in current assets (cr) and $500,000 in current liabilities(cl)
current ratio (cr)=1250000/500000=2.5
Δ note payable ( change in note payable NP)
minimum current=2.2
2.2=(1250000+ΔNP)/(500000+ΔNP)
2.2(500000+ΔNP)=1250000+ΔNP
1100000+2.2ΔNP=1250000+ΔNP
2,2ΔNP-ΔNP=1250000-1100000
1.2ΔNP=150000
ΔNP=150000/1.2=125000
Nelson's short-term debt (notes payable) increase without pushing its current ratio below 2.2=125000
assuming this amount used to increase the inventory
new inventory=335000+125000=360000
current asset= 1250000+125000=1375000
the new ratio=(1375000-360000)/500000+125000
new ratio = 1.624
