Current Ratio : A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets. Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Question

Want to see the full answer?

Answer 1

Question

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Noble Electronics reported annual sales revenue of $3,150,000. During the year, accounts receivable increased from a $65,000 beginning balance to a $85,000 ending balance. Accounts payable decreased from a $70,000 beginning balance to a $50,000 ending balance. How much is cash received from customers for the year? A. $3,130,000 B. $3,135,000 C. $3,165,000 D. $3,100,000

Find the discounted payback period? General accounting

Financial accounting question

Answer 2

Question

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Answer 6

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Answer 7

Chapter 14, Problem 9Q

To determine

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 14 - Prob. 1Q Ch. 14 - What is the basic purpose for examining trends in...Ch. 14 - Prob. 3Q Ch. 14 - Prob. 4Q Ch. 14 - What is meant by the dividend yield on a common...Ch. 14 - What is meant by the term financial leverage?Ch. 14 - Prob. 7Q Ch. 14 - Prob. 8Q Ch. 14 - Prob. 9Q Ch. 14 - Markus Company’s common stock sold for $2.75 per...

Current Ratio : A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets. Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Solution Summary: The author explains that a 2 to 1 current ratio is inadequate for companies to get credit at banks.

Concept explainers

Videos

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Want to see the full answer?

Chapter 14 Solutions

Current Ratio : A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets. Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Solution Summary: The author explains that a 2 to 1 current ratio is inadequate for companies to get credit at banks.

Concept explainers

Videos

Current Ratio: A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets. Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?

Want to see the full answer?

Chapter 14 Solutions

Current Ratio:

A current ratio is comparison between the current assets and current liabilities of a company to determine its ability to payback its short term liabilities from the current assets.

Why a 2 to 1 current ratio is not adequate for a company get a line of credit at a bank?