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Eugene Wright is CFO of Caribbean Cruise Lines. The company designs and manufactures luxury boats. It's near year-end, and Eugene is feeling kind of queasy. The economy is in a recession, and demand for luxury boats is way down. Eugene did some preliminary liquidity analysis and noted the company's current ratio is slightly below the 1.2 minimum stated in its debt covenant with First Federal Bank. Eugene realizes that if the company reports a current ratio below 1.2 at year-end, the company runs the risk that First Federal will call its $10 million loan. He just cannot let that happen.
aribbean Cruise Lines has current assets of $12 million and current liabilities of $10.1 million. Eugene decides to delay the delivery of $1 million in inventory purchased on account from the originally scheduled date of December 26 to a new arrival date of January 3. This maneuver will decrease inventory and accounts payable by $1 million at December year-end. Eugene believes the company can somehow get by without the added inventory, as manufacturing slows down some during the holiday season.
How will the delay in the delivery of $1 million in inventory purchased on account affect the company's current ratio on December 31? Provide supporting calculations of the current ratio before and after this proposed delivery delay.
Is this practice ethical? Provide arguments both for and against.
Member P has an outside basis in his interest in Bing LLC of $10,000 and in 2007, the flowing transactions take place.
If 30% of the month's revenue is collected in the same month, 40% is collected in the second month and 30% is collected in the third month, how much of September's revenue is collected in subsequent months? How much of August's revenue is collecte..
Identifiable net assets were equal to their carrying amounts
Using your textbook and at least one scholarly source, compare cost flows among service, merchandising, and manufacturing enterprises, explaining how healthcare differs from the other enterprises
Gold Company was experiencing financial difficulties, but was not bankrupt or insolvent. The National Bank, which held a mortgage on other real estate owned by Gold, reduced the principal from $110,000 to $85,000.
A Corporation is considering issuing a convertible bond. What is a convertible bond and the advantages of a convertible bond from the standpoint of 1) the bondholder and 2) the issuing corporation.
Compute the cost of goods sold and ending inventory, assuming FIFO cost flow, LIFO cost flow, and weighted average cost flow. Use a vertical model to prepare the 2010 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, w..
Hans purchased a new passenger automobile on August 17, 2009, for $40,000. During the year the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2009.
If $4,000,000 of 12% bonds are issued at 101, the amount of cash received from the sale is:
What are the reasons for the different methods of the classifications?
There were no permanent or temporary differences during these three years. The corporate tax rate is 30% for 2006 and 2007, and 40% for 2008. Assuming that Neasha elects to use the carryback provision, what income (loss) is reported in 2007?
one potential of financing corporations through the use of bonds rather than common stock isa the interest on bonds
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