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Fact Pattern: Liquid Hydrogen Products, LLC, has a 365-day year. The following are its financial statements. LIQUID HYDROGEN PRODUCTS, LLC Income Statement Year ended December 31, 20X8 Sales $2,500 Cost of goods sold Beginning inventory $ 100 Purchases 2,000 Cost of goods available 2,100 Ending inventory 150 Cost of goods sold (1,950) Gross profit margin Selling expenses 125 Administrative expenses 135 General expenses 85 Operating Expenses (345) Pretax income 205 Income taxes (62) Net income $ 143 LIQUID HYDROGEN PRODUCTS, LLC Statement of Equity Year ended December 31, 20X8 Beginning equity $200 Add: net income 143 Ending equity $343 LIQUID HYDROGEN PRODUCTS, LLC Balance Sheet Years 20X8 and 20X7 20X8 20X7 Assets Cash $ 24 $ 2 Accounts receivable 305 135 Prepaid expenses 4 5 Inventory 200 205 Current assets 533 347 Equipment (net of depreciation) 145 150 Total assets $678 $497 Liabilities Accounts payable $200 $175 Noncurrent notes payable 135 122 Equity 343 200 Total liabilities and equity $678 $497

Liquid Hydrogen finds a buyer for its inventory who will pay 90% of the cost of the inventory in cash immediately. If Liquid Hydrogen used the cash to pay off its accounts payable, how much inventory should it sell to get its current ratio within the limits necessary to borrow from its primary lender?

$156. $180. $0. The current ratio as of 12/31/X8 is higher than the minimum of 2:1. $200.

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