Scrubber, Inc, presented the following information in a note to its financial statements for the year ending December 31, 2016.
The company has a loan agreement with Mountain State Bank that states:
1. The current ratio should remain at least 2.0 to 1 at all times.
2. The debt-to-equity ration should not exceed. 7 to 1 at any times.
3. The company must maintain $75,000 cash at all times.
The ratios at year-end are: current ratio, 2.3. to 1 and debt-to-equity ratio,.2 to 1. The amount of cash on the bank statement is $75,400, but the cash account after the adjustments from the bank reconciliation has a balance of $74,900. Has Scrubber violated its loan agreement?
a. No
b. Yes, the cash balance is less than $75,000
c. Yes, the current ratio is. 3 or 30% larger than the agreement indicates.
d. Yes, the cash balance is less than $75,000, and the debt-to-equity ratio is overstated.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Scrubber, Inc, presented the following information in a note to its financial statements for the year ending December 31, 2016. The company ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Which type of firearm sight is simple, inexpensive, and standard on most handguns?
Answers (1)
Mackenzie is responsible for buying a week's supply of food and medication for the puppies and kittens at a local shelter. the food and medication for each puppy costs twice as much as those supplies for a kitten.
Answers (1)
The current price of a 10-year Bond, $1000 par value bond is $1.158,91. Interest on this bond is paid every six months, and the nominal annual yield is 14%. Given these facts, what is the annual coupon rate on this bond? Select one: a. 10% b. 12% c.
Answers (1)
Assume that your parents wanted to have $120,000 saved for college by your eighteenth birthday and they started saving on your first birthday. They saved the same amount each year on your birthday and earned 9% per year on their investments. a.
Answers (1)
The charter of a corporation provides for the issuance of 95,794 shares of common stock. Assume that 41,563 shares were originally issued and 3,342 were subsequently reacquired.
Answers (1)
New Questions in Business
Suppose the Board of Directors of The Staten Island Suppliers Co. announces on October 4th that the regular quarterly dividend of 50 cents per share will be payable to the holders of record at the close of business on November 15th 2019.
Answers (1)
Many government? programs, such as unemployment? compensation, operate on a deficit during recessions and a surplus during periods of economic expansion. the programs are referred to as
Answers (1)
Forlornistan is a country in the midst of a serious economic downturn. Forlornistan's GDP has declined steadily for over three years and is now at its lowest level in over sixty years.
Answers (1)
For Year 2, Etzkorn Corporation's sales were $1,480,000, its gross margin was $580,000, its net operating income was $63,714, its net income before taxes was $42,714, and its net income was $29,900.
Answers (1)
An insured purchased an insurance policy 5 years ago. last year, she received a dividend check from the insurance company that was not taxable. this year, she did not receive a check from the insurer.
Answers (1)