Capital Investments Corporation (CIC) requested a sizable loan from First Federal Bank to acquirea large piece of land for future expansion. CIC reported current assets of $1,900,000 (including$430,000 in cash) and current liabilities of $1,075,000. First Federal denied the loan request for anumber of reasons, including the fact that the current ratio was below 2:1. When CIC was informedof the loan denial, the controller of the company immediately paid $420,000 that was owed to several trade creditors. The controller then asked First Federal to reconsider the loan application. Basedon these abbreviated facts, would you recommend that First Federal approve the loan request?Why? Are the controller’s actions ethical?
Capital Investments Corporation (CIC) requested a sizable loan from First Federal Bank to acquire
a large piece of land for future expansion. CIC reported current assets of $1,900,000 (including
$430,000 in cash) and current liabilities of $1,075,000. First Federal denied the loan request for a
number of reasons, including the fact that the
of the loan denial, the controller of the company immediately paid $420,000 that was owed to several trade creditors. The controller then asked First Federal to reconsider the loan application. Based
on these abbreviated facts, would you recommend that First Federal approve the loan request?
Why? Are the controller’s actions ethical?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
