# The Petry Company has $1,312,500 in current assets and$525,000 in current liabilitie

Asked Jan 29, 2010, 01:46 PM — 7 Answers
The Petry Company has $1,312,500 in current assets and$525,000 in current liabilities. Its initial inventory level is $375,000, and it will raise funds as additional notes payable and use them to increase inventory. HOW MUCH CAN PETRY'S SHORT-TERM DEBT (NOTES PAYABLE) INCREASE WITHOUT PUSHING ITS CURRENT RATIO BELOW 2.0? 7 Answers  morgaine300 Posts: 6,564, Reputation: 1474 Uber Member #2 Jan 29, 2010, 09:14 PM Please see the guidelines for posting homework problems: http://www.askmehelpdesk.com/finance...-b-u-font.html  rdbroeker Posts: 7, Reputation: 5 New Member #3 Jan 30, 2010, 08:36 AM Quote:  Originally Posted by morgaine300 Please see the guidelines for posting homework problems: http://www.askmehelpdesk.com/finance...-b-u-font.html Sorry....I'm a new user....I didn't see the place to post until after I had already submitted. My appologies.  Clough Posts: 27,302, Reputation: 8524 Uber Member #4 Jan 30, 2010, 08:41 AM Hi, rdbroeker! If you post what you think is the answer as well as how you arrived at it, you'll be more likely to have someone knowledgeable come along to confirm whether or not you're correct, and if not, to show you how you can come up with the correct answer. Thanks!  rdbroeker Posts: 7, Reputation: 5 New Member #5 Jan 31, 2010, 01:44 PM Quote:  Originally Posted by Clough Hi, rdbroeker! If you post what you think is the answer as well as how you arrived at it, you'll be more likely to have someone knowledgeable come along to confirm whether or not you're correct, and if not, to show you how you can come up with the correct answer. Thanks! I'm learning. It took a bazillion more tries, and then finally it came to me. You have to increase current liabilities as well as current assets by X to arrive at the given ratio...  ArcSine Posts: 951, Reputation: 518 Senior Member #6 Jan 31, 2010, 02:23 PM Ding, ding, we have a winner! For the standard expression for current ratio $\frac{CA}{CL}$ ...get the problem teed up as the inequality... $\frac{\text{1,312,500 + x}}{\text{525,000 + x}} \ \geq \ 2.0$ ...and then solve it for x (remembering that x in this case represents a positive quantity). You'll end up with a statement that x must be no more than some particular amount--and of course if you set x equal to such amount, the current ratio will be precisely 2.0. Nice job, rdbroeker!  Bjray1 Posts: 3, Reputation: 10 New Member #7 Sep 17, 2010, 03:28 AM$262,500 is the correct answer
 morgaine300 Posts: 6,564, Reputation: 1474 Uber Member #8 Sep 17, 2010, 06:06 PM
Bjray1, the thread is from January. And we also do not just give answers for homework - we try to help them understand it, check their work, etc. You've posted without bothering to even read the entire thread. Read post #2 where the link to the homework guidelines are.

## Check out some similar questions!

Current assets & current liability [ 4 Answers ]

Could anybody explain how current assets and current liability balances can be used in the preparation of the cash flow statement. I will very grateful for any help. Thank you.

This homework problem is killing me. I've been at it for days and it's due at midnight tonight...2 1/2 hours. I need to find the difference between the current assets and current liabilities. Then, I need to find the total assets and net income or loss. GRRRR> Please help! Here's the info given...

Current assets and current liabilities [ 1 Answers ]

What does it mean to "match" current assets and current liabilities? What is the advantage of this strategy?

Current ratio and non current assets [ 1 Answers ]

How do I know what each makes contains. Current assets 25,000 Liabilities 40,000 Equity 55,000 Non current assets=80,000 ( Is this correct) Non current 60,000

Current & Non-Current Assets [ 3 Answers ]

Why is classification of Assets into Current & Non-Current necessary? Or not necessary?