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DanielleElmas [232]
3 years ago
5

urrent and Quick Ratios The Nelson Company has $1,250,000 in current assets and $500,000 in current liabilities. Its initial inv

entory level is $400,000, 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 1.2
Business
1 answer:
charle [14.2K]3 years ago
4 0

Answer: $3,250,000

Explanation:

The Current Ratio is used to calculate if the company's current assets can pay off it's current Liabilities.

It is calculated by dividing Current Assets by Current Liabilities.

The company plans to increase it's note payable to enable it but more Inventory. We can therefore assume that the increase in notes Payable (current Liability) will be the same as the increase in inventory (current asset) since the former is funding the latter.

The company does not want the current Ratio dropping below 1.2 so 1.2 is the ideal ratio.

The formula will therefore be;

1.2 = (Current Assets + Change in Notes Payable ) / Current Liabilities + Change in Notes Payable

1.2 = (1,250,000 + Change in Notes Payable) / 500,000 + Change in Notes Payable

600,000 + 1.2(Change in Notes Payable) = 1,250,000 + Change in Notes Payable

1.2( Change in Notes Payable) - Change in Notes Payable = 1,250,000 - 600,000

0.2 (Change in Notes Payable) = 650,000

Change in Notes Payable = $3,250,000

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Option (B) is correct.

Explanation:

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Q = 100 × (100 - XB) + 200XB - XB^2

Q = 10,000 + 100XB - XB^2

Output is maximum when Q'(XB) = 0

100 = 2XB = 0

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In contrast, what Frank and Smallwood(2013) preached was that information has now become a lifeblood of every organization. This is an undisputed reality in their study and intellectual intervention. Thus, they went on give a demographic distribution of information through the use of social networks and/or web2.0 tools like blogs, microblogs, and wikisa.

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At the beginning of June, Bezco Toy Company budgeted 5,000 toy action figures to be manufactured in June at standard direct mate
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Instructions are below.

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<u>Standard quantity:</u>

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Direct material quantity variance= (standard quantity - actual quantity)*standard price

Standard quantity= 2.5*4,850= 12,125

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