Compute the company’s current ratio

Reference no: EM131421381

1. Before Darrington and Darling borrowed the $100,000, the company's current assets and current liabilities were $130,000 and $80,000, respectively.

a. Compute the company's current ratio if it invests $50,000 of the borrowed funds in fixed assets and keeps the rest as cash or short-term investments. To what dollar amount can current liabilities grow before the company violates the debt contract?

b. Compute the company's current ratio if it invests $80,000 of the borrowed funds in fixed assets and keeps the rest as cash or short-term investments. To what dollar amount can current liabilities grow before the company violates the debt contract?

c. Compute the company's current ratio if it invests the entire $100,000 of the borrowed funds in fixed assets. To what dollar amount can current liabilities grow before the company violates the debt contract?

Reference no: EM131421381

Questions Cloud

Explain specific nature of the company you will be auditing : Consider and discuss the specific risks and nature of the company you will be auditing and create comprehensive work programs for the Inventory, Warehousing, and Payroll accounts and cycles.

How the liabilities affected the basic accounting equation : Monsanto's 2008 annual report stated that the company's liabilities for environmental remediation and litigation contingencies are $262 million as of 8/31/09 ($272 million as of 8/31/08).

Describe what you intend to do-how you will approach task : Your primary care physician operates a sound business practice that, at times, seems to suffer from several forms of waste. In your role as a dedicated patient engaged in the study of operations management, you are in a unique position to offer a..

Magnitude of the net magnetic field midway between the wires : Two long, parallel wires are separated by 3.0m. Each wire has a 25-Acurrent, but the currents are in opposite directions. Determine the magnitude of the net magnetic field midway between the wires.

Compute the company’s current ratio : Compute the company's current ratio if it invests $50,000 of the borrowed funds in fixed assets and keeps the rest as cash or short-term investments. To what dollar amount can current liabilities grow before the company violates the debt contract?

Atmosphere change from blue to red at sunset : People on Earth see the atmosphere change from blue to red at sunset. Consider an astronaut orbiting the Earth looking at their sunset. How will their sunset differ in color? Explain.

Describe risks the control is designed to mitigate : Identify the related transaction-related audit objective(s) affected by the control. Describe risks the control is designed to mitigate. Design a test of control to determine if the control is operating effectively.

Produce notes covering the entire range of human hearing : You decide to build a pipe organ out of PVC pipe, in your room at home. Estimate whether your organ could produce notes covering the entire range of human hearing, and still fit inside your room (without bending any of the pipes). If not, what is ..

User Account

All Pages