Crane Inc. (CI) has a short-term working capital loan to help finance its working capital. The terms of the loan enable CI to borrow anamount of up to 35% of its inventory balance and 55% of its accounts receivable. One of the loan covenants requires that CI maintaina current ratio greater than 2. Information related to CI's current assets and current liabilities is shown in the following table:In thousandsCashAccounts receivableInventoryOther current assets,Accounts payableShort-term bank loanOther current liabilities(a)Current ratio2024CI$1612,0541,3423381.402562562023$2241,2302,3063951.343Does CI satisfy the loan covenant in both years? (Round answers to 2 decimal places, eg. 18.45)2781122024timesthe loan covenant in 2024the loan covenant in 20232023times

The liquidity ratio used to assess a company's capacity to meet short-term or one-year-due…

Answered: Crane Inc. (CI) has a short-term…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Gil Corporation has current assets of $90,000 and current liabilities of $180,000. Required: Compute the effect of each of the following independent transactions on Gil's current ratio: 1. Refinancing a $30,000 long-term mortgage with a short-term note. 2. Purchasing $50,000 of merchandise inventory with short-term accounts payable. 3. Paying $20,000 of short-term accounts payable. 4. Collecting $10,000 of short-term accounts receivable.
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Bank Muscat reported pretax income of OMR 800,000 along with a loan loss provision of OMR 80,000 and net charge- offs of OMR 40,000. Its loan loss provision coverage ratio would be Answer.
Adobo Company assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?
On January 1, 20x1, an entity obtains an 11%, P5,000,000 bank loan. The bank charges the entity an 8.74% nonrefundable loan origination fee. The principal on the loan matures on December 31, 20x4 but interest is due annually every December 31. Requirements: Compute for the initial carrying amount of the loan. Compute for the effective interest rate on the loan. Compute for the carrying amount of the loan on December 31 20x1.
Vaughn Manufacturing assigns $7300000 of its accounts receivables as collateral for a $2.64 million 9% loan with a bank. Vaughn Manufacturing also pays a finance fee of 2% on the transaction upfront. What would be recorded as a gain (loss) on the transfer of receivables?
Gingerbread Corp was issued a $250,000 loan at 8% with a five year maturity date. The partial amortization schedule prepared by the company accountant is presented below. What will the company record for interest expense in period 4? (round decimal up to the nearest whole $) Interest expense in period four ?
The following information is related to ABC Co.:1. Accounts receivable of €60,000 (gross) are factored with BFO Credit without guarantee at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company.2. Specific accounts receivable of €45,000 (gross) are pledged to ADORO Credit. as security for a loan of €30,000 at a finance charge of 6% of the amount of the loan. The finance company will make the collections.Required:Prepare all necessary entries in general journal form for ABC Co.
Entity A invested $18,000 in 10.00% loan notes. The loan interest is paid in arrears. The loan notes are repayable at a premium after 3 years. The effective rate of interest is 12.00%. Entity A intends to collect the contractual cash flows which consist solely of repayments of interest and principal. REQUIRED: (1) Measure the interest revenue recognised in the Statement of Profit or Loss of year 3. (2) Measure the loan notes recognised in the Statement of Financial Position of year 2
VKS Co. assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?
The company purchased the equipment 600,000. The interest rate of bank is 12,400. The loan is denominated in OMR, matures on March 31 2019. The spot rate of OMR 2.50. What is the value of interest expenses?Select one:a. OMR 12,400b. OMR 1,500,000c. OMR 31,000d. None of the other points
Use the following information for the following questions: Smooth Pass Corp. has three sources of borrowings in an accounting period: Outstanding Liabilities Interest Change Seven-year loan 8,000,000 1,000,000 25-year loan 12,000,000 1,000,000 Bank overdraft 4,000,000 600,000 QUESTIONS: If all of the borrowing are used to finance the production of a qualifying asset, but none of the borrowings relate to a specific qualifying asset, what is the capitalization rate? a. 9.67% b. 10%. c.10.83% d.11.33 % 2. If the seven-year loan is an amount which can be specifically identified with a qualifying asset, what is capitalization rate? a. 9.67%. b. 10%. c. 10.83% d. 11.33%

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