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21. Partial financial data for a company: To...

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21. Partial financial data for a company: Total current assets = $400,000 Current ratio = 4.0 to 1 Times interest earned = 6.7 Industry average data: Current ratio = 1.9 to 1 Viewing this data from the perspective of a short-term creditor being asked for a one-year loan of $100,000, which statement is true? A. This company would be a less attractive credit risk than the industry average. B. The current ratio shows that the company has less working capital available for debt service than the industry average. C. This company has enough working capital to cover the loan amount, making it a good credit risk. D. The times interest earned ratio shows that the company would have trouble making its interest payments.

 

Paper#13085 | Written in 18-Jul-2015

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