7.1 Forum No answers without reading. No answers. Analysis of financial statements: current rate (current ratio) Instructions: 1. Read the situation below and participate in the forum by answering as requested.

The ABX company requested a line of credit to finance the production operations of a new article. The bank denied the request because in its analysis of the financial statements the current rate (current ratio) was less than 2. 2. Answer the following question:

Why do you think the bank considered that the current rate less than 2 was not appropriate? What other factors might be considered in evaluating a current rate of less than 2 as appropriate? 3. When preparing your answer, explain what a company's current rate measures and its importance for effective financial planning.