A current ratio of 2.0 indicates:

a. inventories are too high

b. the firm does not have enough cash

c. the firm is using long term liabilities, preferred stock or equity to finance a portion of its current assets

d. the firm is matching financing across the balance sheet

e. the firm is financing fixed assets with current liabilities

A compensating balance is:

a. a bank discount

b. a credit discount given by a bank

c. a rebate

d. a form of inventory financing

e. none of the above

A formal agreement between a bank and a borrower indicating the maximum pre-arranged credit the bank will extend to borrower is:

a. Line of credit

b. Compensating balance

c. Discount loan

d. Operating loan

e. None of the above