Provident Manufacturing recently began paying all of its invoices within 20 days of receipt, rather than its usual 30 days. How would this adjustment likely affect Provident's chances of receiving a bank loan in the near future? O Provident would be less likely to receive a loan, because this adjustment would reduce the firm's current liabilities to a lower level than most banks like to see. O Provident would be less likely to receive a loan, because this adjustment suggests the firm does not anticipate having enough money to pay its debts in the months to come. O Provident would be more likely to receive a loan, because this adjustment would maximize the firm's current liabilities while minimizing its use of long-term debt. O Provident would be more likely to receive a loan, because this adjustment would minimize the firm's current liabilities while also showing the firm's ability to promptly pay off short-term debts.
Provident Manufacturing recently began paying all of its invoices within 20 days of receipt, rather than its usual 30 days. How would this adjustment likely affect Provident's chances of receiving a bank loan in the near future? O Provident would be less likely to receive a loan, because this adjustment would reduce the firm's current liabilities to a lower level than most banks like to see. O Provident would be less likely to receive a loan, because this adjustment suggests the firm does not anticipate having enough money to pay its debts in the months to come. O Provident would be more likely to receive a loan, because this adjustment would maximize the firm's current liabilities while minimizing its use of long-term debt. O Provident would be more likely to receive a loan, because this adjustment would minimize the firm's current liabilities while also showing the firm's ability to promptly pay off short-term debts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Provident Manufacturing recently began paying all of its invoices within 20 days of receipt, rather than its usual 30 days. How would
this adjustment likely affect Provident's chances of receiving a bank loan in the near future?
Provident would be less likely to receive a loan, because this adjustment would reduce the firm's current liabilities to a
lower level than most banks like to see.
O Provident would be less likely to receive a loan, because this adjustment suggests the firm does not anticipate having
enough money to pay its debts in the months to come.
O Provident would be more likely to receive a loan, because this adjustment would maximize the firm's current liabilities while
minimizing its use of long-term debt.
O Provident would be more likely to receive a loan, because this adjustment would minimize the firm's current liabilities while
also showing the firm's ability to promptly pay off short-term debts.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7e0cd55c-6f84-412a-ac81-9a79eaea810f%2F378f898f-be7c-44b4-9baf-15b0950e3261%2Ffsw8bk_processed.png&w=3840&q=75)
Transcribed Image Text:Provident Manufacturing recently began paying all of its invoices within 20 days of receipt, rather than its usual 30 days. How would
this adjustment likely affect Provident's chances of receiving a bank loan in the near future?
Provident would be less likely to receive a loan, because this adjustment would reduce the firm's current liabilities to a
lower level than most banks like to see.
O Provident would be less likely to receive a loan, because this adjustment suggests the firm does not anticipate having
enough money to pay its debts in the months to come.
O Provident would be more likely to receive a loan, because this adjustment would maximize the firm's current liabilities while
minimizing its use of long-term debt.
O Provident would be more likely to receive a loan, because this adjustment would minimize the firm's current liabilities while
also showing the firm's ability to promptly pay off short-term debts.
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