Project #2401 - finance

(Liquidity analysis)

When firms enter into loan agreements with their bank it is very

common for the agreement to have a restriction on the minimum current ratio the firm

has to maintain. So, it is important that the firm be aware of the effects of their decisions

on the current ratio. Consider the situation of Advanced Autoparts (AAP) in 2009. The

firm had total current assets of $1,807,626,000 and current liabilities of $1,364,994,000.

a.

What is the firm’s current ratio?

b.

If the firm were to expand its investment in inventory and finance the expansion by

increasing accounts payable, how much could they increase their inventory without

reducing the current ratio below 1.2?

c.

If the company needed to raise its current ratio to 1.5 by reducing its investment in

current assets and simultaneously reducing accounts payable and short-term debt,

how much would it have to reduce current assets to accomplish this goal?

 

Show work

Subject Mathematics
Due By (Pacific Time) 02/16/2013 12:00 pm
Report DMCA
TutorRating
pallavi

Chat Now!

out of 1971 reviews
More..
amosmm

Chat Now!

out of 766 reviews
More..
PhyzKyd

Chat Now!

out of 1164 reviews
More..
rajdeep77

Chat Now!

out of 721 reviews
More..
sctys

Chat Now!

out of 1600 reviews
More..
sharadgreen

Chat Now!

out of 770 reviews
More..
topnotcher

Chat Now!

out of 766 reviews
More..
XXXIAO

Chat Now!

out of 680 reviews
More..
All Rights Reserved. Copyright by AceMyHW.com - Copyright Policy