Current position analysis OBJ. 2 The bond indenture for the 10-year, 9% debenture bonds issued January 2, 2015, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 2016, the three measures were computed as follows:

1. Current assets:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102,000 Temporary investments . . . . . . . . . . . . . . . . . . . . . . 48,000 Accounts and notes receivable (net) . . . . . . . . . . . 120,000 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,800 Property, plant, and equipment . . . . . . . . . . . . . . . 55,200 Total current assets (net) . . . . . . . . . . . . . . . . . . $510,000 Current liabilities:

Accounts and short-term notes payable ....... $ 96,000 Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,000 Total current liabilities . . . . . . . . . . . . . . . . . . . . 300,000 Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210,000 2. Current ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 $510,000  $300,000 3. Quick ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 $115,200  $ 96,000

a. List the errors in the determination of the three measures of current position analysis.

b. Is the company satisfying the terms of the bond indenture?