A corporate loan applicant has cash of $40, receivables of $50, and inventory of $20. The applicant also has current debts of $65. If the bank's policy requires a current ratio of 1.75 or better and an acid test ratio of 1.25 or better, would the applicant receive the loan? Multiple Choice Yes, because the applicant's current ratio and acid test ratios are acceptable. No, because the applicant's current ratio and acid test ratios are both unacceptable. No, because although the applicant's current ratio is acceptable, its acid test ratio is not No, because although the applicant's acid test ratio is acceptable, its current ratio is not

A corporate loan applicant has cash of $40, receivables of $50, and inventory of $20. The applicant also has current debts of $65. If the bank's policy requires a current ratio of 1.75 or better and an acid test ratio of 1.25 or better, would the applicant receive the loan? Multiple Choice Yes, because the applicant's current ratio and acid test ratios are acceptable. No, because the applicant's current ratio and acid test ratios are both unacceptable. No, because although the applicant's current ratio is acceptable, its acid test ratio is not No, because although the applicant's acid test ratio is acceptable, its current ratio is not

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Tuckahoe Hospital wishes to establish a line of credit with a bank. FIRST Bank terms call for a $500,000 maximum loan with an interest rate of 4% and a $2,000 fee. SECOND Bank terms call for a $500,000 maximum loan with an interest rate of 5% but no fee. The compensating balance requirement is 5% of the total line of credit for either bank. What is the effective interest rate for Tuckahoe Hospital from SECOND Bank if 50% of the total amount were used during the year?
Note the following information. A line of credit is an agreement between a bank and a borrower by which the borrower can borrow any amount of money (up to a mutually agreed-upon maximum) at any time, simply by writing a check. Typically, monthly simple interest payments are required, and the borrower is free to make principal payments as frequently or infrequently as he or she wants. Usually, a line of credit is secured by the title to the borrower's house, and the interest paid to the bank by the borrower is deductible from the borrower's income taxes.James and Danna Wright did not have sufficient cash to pay their income taxes. However, they had previously set up a line of credit with their bank. On April 15, they wrote a check to the Internal Revenue Service on their line of credit for $10,154. The line's interest rate is 4.125%. (Round your answers to the nearest cent.) (a) Find the size of the required monthly interest payment.$ (b) The Wrights decided that it would be in their…
2.-When deciding to accept a cash discount from a supplier, on what day is it advisable to take the financing? A) On the last day of the discount period, to see if they are able to meet the discount. B) On the first day of the discount period, so why wait? C) On any day of the discount period D) In the middle of the discount period, so there is no risk.
Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2020, for Business Solutions follow. Total assets . $120,268 Total liabilities . $875 Total equity $119,393 Required 1. The bank has offered a long-term secured note to Business Solutions. The bank’s loan procedures require that a client’s debt-to-equity ratio not exceed 0.8. As of March 31, 2020, what is the maximum amount that Business Solutions could borrow from this bank? 2. If Business Solutions borrows the maximum amount allowed from the bank, what percentage of assets would be financed (a) by debt and (b) by equity? 3. What are some factors Santana Rey should consider before borrowing the funds?
1. A FICO score: A. Is a common credit rating system B. Is only issued through banks C. Is a type of credit report D. None of these\ 2. Flexible expenses may include: A. Clothing B. Utilities C. Food D. All of these E. None of these 3. If you have a credit card: A. Pay it off each month B. Spend wisely C. Use it as a tool to gain good credit D. All of these E. None of these
Help me with correct explanation. Not solve in excel works.
Your company has loaned money to an outside entity. You earned the monthly interest on the loan but did not receive the payment yet. The payment is expected to be received next month. To capture the interest expected to be received in the future you have created account #901 , Interest Receivable in your chart of accounts and booked the journal entry to DR: Interest Receivable and CR: Interest Income. While the basic journal entry was correct, your manager is questioning how you setup this new account. Based on this image of the chart of accounts below what needs to be corrected and how would you correct this?
You have just been hired as a financial manager for BEE Inc. Management has provided you with the information below and has asked you to provide a brief explanation for each of the following questions. Your answer must be a minimum of one sentence and no longer than two or three sentences. One word answers or an answer of "good" or "bad" only will receive zero marks. 2021 2020 2019 Current ratio .99 1.32 1.69 Total debt ratio 0.540 0.495 0.489 Profit Margin 0.10 0.11 0.14 Inventory Turnover 2.60 3.14 4.18 a. Based on the results of the past three years, how is the company doing in regards to their ability to pay their short-term debts? Please refer to the specific ratio you would point out to management that backs up your answer. b. The benchmark industry average for the debt ratio is ,490. What does this mean for BEE Inc.? c. The benchmark industry average for the profit margin is .15. What advice would you give…
1. What are the advantages and disadvantages of offering credit? 2. What precautions should she take before offering credit to people like John? 3. If Kate grants credit to John, the terms will be 2/10, n/30. Assuming the payment is made during the 10-day discount period, what would be the journal entry to record the sale and then subsequent payment? 4. If instead of playing early John pays in 25 days, what would the journal entry to record the payment? 5. Rather than providing the financing directly, assume that Kate decides to allow the use of credit cards. Further, assume that during the month there is 15,000 worth of credit cards sales. Provide the journal entry to record the sales, along with the associated credit card fee. The cost of goods sold total is 13,500.
Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2022, for Business Solutions follow. Total assets $121,568 Total liabilities $862 Total equity $120,706 Required:1. The bank has offered a long-term secured note to Business Solutions. The bank’s loan procedures require that a client’s debt-to-equity ratio not exceed 0.77. As of March 31, 2022, what is the maximum amount that Business Solutions could borrow from this bank? (Round your intermediate calculations to the nearest dollar amount.)2. Assume Business Solutions borrows the maximum amount allowed from the bank. (Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place.)(a) What percentage of assets would be financed by debt?(b) What percentage of assets would be financed by equity?
Recorded credit sales. Select the accounts) that would be debited and credited when recording the above transaction. If a second debit or credit does not apply, select "None" as a match. Debit = ? Credit = ? Options: Note Payable Accounts Receivable Salaries Expense Supplies Paid in Capital Common Stock Sales Revenue Salaries Payable Prepaid Insurance Unearned Revenue Cash Interest Expense Insurance Expense Supplies Expense Common Stock Equipment Accounts Payable Note Receivable

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