The company manager targets to reduce the current ratio in the year (2020) by 33% from the previous year (2019), this requiring to downsize the amount of the total current asset. To what level can the manager reduce the total current asset to achieve this target at (2020)? Data of 2019  Total Asset Turnover 2 Times Net Fixed Asset 400 (Thousand OMR) Total Liabilities 400 (Thousand OMR) Sales 2000 (Thousand OMR) Quick Ratio 1.5 Times Accounts Receivable 150 (Thousand OMR) Long-term Liabilities 200 (Thousand OMR)

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter12: Corporate Valuation And Financial Planning
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The company manager targets to reduce the current ratio in the year (2020) by 33% from the previous year (2019), this requiring to downsize the amount of the total current asset. To what level can the manager reduce the total current asset to achieve this target at (2020)?

Data of 2019 

Total Asset Turnover

2 Times

Net Fixed Asset

400 (Thousand OMR)

Total Liabilities

400 (Thousand OMR)

Sales

2000 (Thousand OMR)

Quick Ratio

1.5 Times

Accounts Receivable

150 (Thousand OMR)

Long-term Liabilities

200 (Thousand OMR)

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