How much can short-term debt increase without pushing

Reference no: EM132634128

Question 1.) The Stewart Company has $1,167,500 in current assets and $513,700 in current liabilities. Its initial inventory level is $268,525, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest dollar.

Question 2.) The W.C. Pruett Corp. has $250,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 8%. In addition, it has $600,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $1.6 million, its average tax rate is 40%, and its profit margin is 7%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.

Reference no: EM132634128

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