Nov 20 The Nocturnal Departures Home Improvement Co. applies for a trade credit account. Nocturnal provides the following financial information in its credit application:

Cash 12,000 Short-term Liabilities 2,000

Total Assets 15,500 Total Liabilities 5,000

a. Based on the information provided on November 20:

1) What is Nocturnals ratio of cash to short-term liabilities?

2) What is its ratio of Total Liabilities to Total Assets?

3) Using the same credit standards that BWLC applied to Beacon, does it appear that Nocturnal meets Beacons standards for trade credit? (Per p. 5, BWLC required that Beacons ratio of debt to total assets not exceed .7, and that its current ratio not fall below 2.45.)