Use them to increase inventory

Assignment Help Financial Management
Reference no: EM131182532

The Nelson Company has $1,350,000 in current assets and $500,000 in current liabilities. Its initial inventory level is $250,000, and it will raise funds as additional notes payable and use them to increase inventory.

How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.3? Round your answer to the nearest cent.

What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.

Reference no: EM131182532

Questions Cloud

Methods does not consider the investments profitability : Which of the following methods does not consider the investment’s profitability? Cash + short-term investments + net current receivables) divided by current liabilities is the formula for
Depreciation is straight-line to zero over life of project : We are evaluating a project that costs $1,220,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 88,900 units per year. Calculate the best-case a..
Statements about preferred stock : Which of the following statements about preferred stock is FALSE?
Attempting to raise money for new business venture : Suppose that you are attempting to raise money for new business venture. You estimate that your business will generate $10,000 of free-cash-flow each month in perpetuity. Say Mark Cuban offers you $2,000,000 today to help you make the initial investm..
Use them to increase inventory : The Nelson Company has $1,350,000 in current assets and $500,000 in current liabilities. Its initial inventory level is $250,000, and it will raise funds as additional notes payable and use them to increase inventory. What will be the firm's quick ra..
International accounting standards board : Conduct research and write a 2–3 page paper addressing the following Topic: International Financial Reporting Standards. International Financial Reporting Standards (IFRS) are formulated by the International Accounting Standards Board (IASB), which i..
Determine the interest payment for the three bonds : Determine the interest payment for the following three bonds
Evaluate the company working capital adequacy : DELTA AIRLINES Evaluate the company’s working capital adequacy, its cash flow, its financing history (has it borrowed money from financial institutions, or issued bonds, stocks, etc.) and future plans If the company issues stock, is it growth or inco..
Cash flow streams worth : How much are each of the following cash flow streams worth today?

Reviews

Write a Review

Financial Management Questions & Answers

  Constant growth valuation-what stock price is expected

Woidtke Manufacturing's stock currently sells for $24 a share. The stock just paid a dividend of $3.50 a share (i.e., D0 = $3.50), and the dividend is expected to grow forever at a constant rate of 10% a year. What stock price is expected 1 year from..

  Market be assuming about the growth in dividends

If a stock is selling for 200 in the stock market, what might the market be assuming about the growth in dividends when the dividend at time t =1 is expected to be 4.25 per share and r is 5%?

  Suppose the returns on long-term government bonds

Suppose the returns on long-term government bonds are normally distributed. Assume long-term government bonds have a mean return of 6.3 percent and a standard deviation of 9 percent.

  Calculate the quarterly arithmetic average return on fund

You are the manager of the XYZ mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $100 million. January HPR= -1.3% February HPR= 6.2% March HPR = 2.2..

  When a firm is evaluating the introduction of a new product

The depreciation is best defined as the: A university converted the bottom 3 floors of an apartment building they own to classrooms. The option that is forgone so that the university can utilize it for classroom is: When a firm is evaluating the intr..

  Dividend growth rate-what will share of stock sell for today

Storico Co. just paid a dividend of $1.90 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent divid..

  Individual retirement account

Dan plans to fund his individual retirement account (IRA. with the maximum contribution of $2,000 at the end of each year for the next 10 years. If Dan can earn 10 percent on his contributions, how much will he have at the end of the tenth year?

  Find equivalent annual end-of-year dividend for each year

Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out i..

  Types of firms to lower their asset requirements

Companies with relatively high assets to sales ratios require a relatively large amount of new assets for any given increase in sales: hence they have a greater need for external financing. there are currently no alternatives for these types of firms..

  Discount for the yen versus the dollar

Calculate the one-, three-, and six-month forward premium or discount for the Japanese yen versus the U.S. dollar using the following American term quotations. For simplicity, assume each month has 30 days. What is the interpretation of your results?

  Explain which is more risky bonds or common stocks.

Explain how understanding risk and return will help you in future business ventures.

  Realize his retirement dream

Brothers, Mark and Mike Lalla want to plan for their retirement and need your advice. Mark plans to travel extensively in the first 5 years of his retirement and will need $450,000 each year to do so. After that he will be able to live on $100,000 pe..

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