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What will happen to the firm current ratio

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Question - Liquidity Analysis - The King Carpet Company has $2,870,000 in cash and a total of $12,320,000 in current assets. The firm's current liabilities equal $6, 140,000 such that the firm's current ratio equals 2.0. The company's managers want to reduce the firm's cash holdings down to $1, 100,000 by paying $583,000 in cash to expand the firm's truck fleet and using $1,187,000 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: EM133100949

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