A company is applying for a line of credit at a bank. The companys current ratio is

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A company is applying for a line of credit at a bank. The company’s current ratio is 2 to 1. Al¬ though the bank felt that the company should be able to meet its short-term obligations, they stated that the current ratio was a concern. Discuss why a current ratio of 2 to 1 might indicate problems for the company.

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Managerial Accounting

ISBN: 12

3rd Edition

Authors: James Jiambalvo

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