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What will happen to the firm current ratio

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Question - Liquidity Analysis - The King Carpet Company has $2,940,000 in cash and a total of $11,900,000 in current assets. The firm's current liabilities equal $5,500,000 such that the firm's current ratio equals 2.2. The company's managers want to reduce the firm's cash holdings down to $1,000,000 by paying $537,000 in cash to expand the firm's truck fleet and using $1,403,000 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: EM133048141

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