Multiple Choice
Marcy Corporation's current ratio is currently 1.75 to 1.The firm's current ratio cannot fall below 1.5 to 1 without violating agreements with its bondholders.If current liabilities are presently $250 million,what is the maximum new short-term debt that can be issued to finance an equivalent amount of inventory expansion?
A) $41.67 million.
B) $62.50 million.
C) $125.00 million.
D) $375.00 million.New short term debt = (437.5M - 250M * 1.5) /(1.5 - 1) = $125 million.
Correct Answer:
Verified
Correct Answer:
Verified
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