The bond indenture for the 10-year, 10% debenture bonds dated January 2, 2014, required working capital of $142,000, a current ratio of 1.7, and a quick ratio of 1.2 at the end of each calendar year until the bonds mature.
January 4, 2018
Examine participative government methods for aspects of problem complexity, stakeholder participation, obstacles, tangible results, and acknowledgement of success.
January 4, 2018

b. Would you as a bank loan officer make the loan? Why or why not?

The Raattama Corporation had sales of $3.5 million last year, and it earned a 5 percent return, after taxes, on sales. Recently, the company has fallen behind in its accounts payable. Although its terms of purchase are net 30 days, its accounts payable represent 60 days’ purchases. The company’s treasurer is seeking to increase bank borrowings in order to become current in meeting its trade obligations (that is, to have 30 days’ payables outstanding). The company’s balance sheet is as follows (thousands of dollars):

a. How much bank financing is needed to eliminate the past-due accounts payable?

b. Would you as a bank loan officer make the loan? Why or why not?

 

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