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Please explain thoroughly Problem 1 RedCap Manufacturing, Inc. is planning to increase its average inventory...

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Accounting

Please explain thoroughly

Problem 1

RedCap Manufacturing, Inc. is planning to increase its average inventory balance by taking out a short-term loan (i.e., increase notes payable) and buying additional inventory. RedCap believes that this event will have no effect on either sales or costs, and therefore no effect on net income. All else constant, this new policy should cause the firms quick ratio (assuming an initial quick ratio of 0.7) to: a. Increase b. Decrease c. No Change d. Not enough information is provided to answer this question.

Problem 2

The Takeaway Shop has net income after tax of $390,000 for its most recent year. The company's income statement included Income Tax Expense of $160,000 and Interest Expense of $70,000. At the beginning of the year The Takeaway Shop's stockholders' equity was $1,850,000 and at the end of the year it was $2,100,000.

What is the times interest earned for The Takeaway Shop?

What is total dollar amount of dividends paid by Takeaway Shop in 2020?

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