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What would be the? firm new debt? ratio

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Reference no: EM133103091

Question - The liabilities and? owners' equity for Campbell Industries is found? here: The King Carpet Company has $2,850,000 in cash and a total of $12,000,000 in current assets. The? firm's current liabilities equal $5,490,000 such that the? firm's current ratio equals 2.2. The?company's managers want to reduce the? firm's cash holdings down to $1,010,000 by paying $556,000 in cash to expand the? firm's truck fleet and using $1,284,000 in cash to retire a? short-term note. If they carry this plan?through, what will happen to the? firm's current? ratio?

a. What percentage of the? firm's assets does the firm finance using debt? (liabilities)?

b. If Campbell were to purchase a new warehouse for $1.3 million and finance it entirely with? long-term debt, what would be the? firm's new debt? ratio?

Reference no: EM133103091

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