In: Accounting
Your CFO has come to discuss the company's investment in inventory. He notes that within the industry, the upper quartile of performers maintain a quick ratio of 1.19. You have the following data available to you:
Current Assets | $1,654,940 |
Current Liabilities | $1,177,856 |
Inventory Investments |
$472,193 |
You have been tasked with ensuring that the firm changes its inventory investment levels to meet the quick ration, 1.19, noted above. If you need to acquire additional inventory, you may raise funds through notes payable. If you have to reduce inventory, the funds generated through its sale will be used to retire short term debt (i.e., pay off notes payable). By how much will inventory have to be changed? If inventory must be reduced, indicate that fact by using a "-" sign when entering the reduction in inventory investment.