Problem regarding the liquidity analysis

Assignment Help Finance Basics
Reference no: EM131728345

(Liquidity analysis)

The Crown 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?

Reference no: EM131728345

Questions Cloud

What is the current market price : What is the current market price of a 5-year bond with a face value of $100 that has a coupon rate of 13% with an annual coupon payments
What amount of the gain from the sale of equipment : What amount of the gain from the sale of equipment will be reported in the investing activities section of the Statement of Cash Flows for fiscal year 2016
Business communications in a global workplace environment : Compare and contrast the impact of gender on business communications in a global workplace environment - Examine Hofstede's Dimensions of Cultural Differences
Discuss the elements of planning that are used by company : Discuss the elements of planning, control, and decision making that are used by that company.
Problem regarding the liquidity analysis : The Crown 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
How much should equity be after making the adjustment : A firm reports assets of $7,500 on the Income Statement. If the tax rate is 25%, then how much should equity be after making the adjustment
Adjusted closing prices on stock : What is the total return on your portfolio given the following adjusted closing prices on each stock (please enter the answer in percent format
What is the variance of portfolio in percent : The variance of Stock A is 50 percent, the variance of Stock B is also 50 percent, and the covariance between the two stocks is 0 percent.
Create a flyer for a human resources department : You will use the website smore.com to create a flyer for a human resources department briefing. Make sure to discuss in your flyer

Reviews

Write a Review

Finance Basics Questions & Answers

  Analyze which would make more financial sense

Which would make more financial sense? Buying or leasing the home? Explain your rationale. Given the facts above, should you lease the house or sell it?

  The current price of a non-divident paying stock is 30 over

the current price of a non-divident paying stock is 30. over the next six months it is expected to rise to 36 or fall

  What is the profitability index

ABC is reviewing a project that will cost $2,081.The project will produce cash flows $594 at the end of each year for the first two years and $784 at the end of each year for the next three years. What is the profitability index? Assume interest rate..

  Determine whether interest rate parity is currently holding

Determine whether interest rate parity is currently holding. If IRP is not holding, how would you carry out covered interest arbitrage? Show all the steps and determine the arbitrage profit. Explain how IRP will be restored as a result of covered arb..

  Now suppose that instead of issuing debt beta is financed

in 2007 beta corporation earned gross profits of 760000.a. suppose that it is financed by a combination of common stock

  Provide the journal entry to record the write-down

Applying the lower-of-cost-or-market rule in this case would cause TII to recognize a loss in the period of the write-down and income in the subsequent period. Does such recognition seem appropriate? Why or why not?

  List four concepts two from the video and two from article

List and describe four concepts -- two from the video and two from the article -- that we covered in class that were discussed in detail in the materials.

  What position has more downside exposure: a short position

What position has more downside exposure: a short position in a call or a short position in a put? That is, in the worst case, in which of these two positions would your losses be greater?

  Discounted payback statistic for the project

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable pay back and discounted payback statistic for th..

  Article available in the ku library

Include as part of your paper a discussion regarding the dangers of early retirement plan distributions. You should use multiple sources beyond the article for the review whether it agrees or disagrees with the KU Library article as part of your a..

  Explain count as it relates to point and figure charting

Explain Congestion area , Trend line, Wall and Count terms as it relates to point-and-figure charting:

  What does an net present value of zero imply

What does an net present value of zero imply?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd