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:
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?