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.
The bond indenture for the 10 year 10 debenture bonds dated
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. At December 31, 2015, the three measures were computed as follows:
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a. List the errors in the determination of the three measures of liquidity analysis.
b. Is the company satisfying the terms of the bond indenture?