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Cash to retire a short-term note

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The King 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: EM131086442

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