Jay Oullette, CEO of Bumper to Bumper Incorporated, anticipates that his company's year$-$end balance sheet will show current assets of $$300,000$ and current liabilities of $$200,000.$ Oullette has asked your advice concerning a possible early payment of $$75,000$ of accounts payable before year$-$end, even though payment isn$$t due until later.

Required:

Calculate the firm$$s working capital and current ratio under each situation.

Assume that Bumper to Bumper had negotiated a short$-$term bank loan of $$50,000$ that can be drawn down either before or after the end of the year. Calculate working capital and the current ratio at year$-$end under each situation, assuming that early payment of accounts payable is not made.

When would you recommend that the loan be taken?