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3 March, 06:04

The current ratio (assets/liabilities) of company X is 2.9. Given that the current assets are $377000, find the current liabilities:

Current liabilities = 130000

The board of directors determines that the current ratio must never be below 2.6. What is the maximum amount that the company can borrow?

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  1. 3 March, 06:32
    0
    The maximum amount that the company X can borrow is $ 145,000

    Step-by-step explanation:

    1. Let's review the information given to us to answer the question correctly:

    Current ratio of assets/liabilities = 2.9

    Current assets = $ 377,000

    Current liabilities = Currents assets/Ratio = 377,000/2.9 = $ 130,000

    2. The board of directors determines that the current ratio must never be below 2.6. What is the maximum amount that the company can borrow?

    Desired ratio of assets/liabilities = 2.6

    Current assets = $ 377,000

    Desired liabilities = $ Current assets/Ratio = 377,000/2.6 = $ 145,000

    The maximum amount that the company X can borrow is $ 145,000
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