Link Back to Chapter 4 (Current Ratio and Debt Ratio). Among its many products, Continental Paper Company makes paper for shopping bags, canned-food labels, and magazines. Ruth Majer, the Chief Budget Officer, is responsible for Continental's cash budget for 20X5. The budget helps Majer determine the amount of long-term borrowing needed to end the year with a cash balance of $300 million. Majer has assembled budget data for 20X5. Not all of the following items are used in preparing the cash budget. Receipts are positive amounts: payments are in parentheses. Acquisition of other companies. Actual cash balance. December 31, 20X4.. Borrowing Budgeted total assets before borrowing. (In millions) $ (1,168) 340 23.977 Budgeted total current assets before borrowing. 5.873 Budgeted total current liabilities before borrowing.. Budgeted total liabilities before borrowing. 4.863 16.180 Budgeted total stockholder's equity before borrowing.. Collections from customers. 7.797 19.467 Payments to owners (237) Investments by owners.. 516 1,153 111 (950) (2,349) (14.345) Net income Other cash receipts.. Payment of long-term and short-term debt. Payment of operating expenses. Purchases of inventory. Purchase of property and equipment. Required (1,518) 1. Prepare the cash budget to determine the amount of borrowing Continental Paper needs during 20X5. 2. Compute Continental Paper's expected current ratio and debt ratio at December 31, 20X5. both before and after borrowing on long-term debt. Assume you are the chief loan officer at a bank. Based on these figures, and on the budgeted levels of assets and liabilities, would you lend the requested amount to Continental Paper? Give the reason for your decision.