Read the following ethical dilemma section. Read through the scenario presented. Create a discussion arguing in favor of Jackson Phillips's proposal to increase the company's current ratio. Remember to use logic and the accounting principles you have learned thus far to develop your argument. You must include at least three points as to why this route is the best route to go (with one of those points being related to the learned accounting principles).

Ethical Dilemma Section:

The Raintree Cosmetic Company has several loans outstanding with a local bank. The debt agreements all contain a covenant stipulating that Raintree must maintain a current ratio of at least 0.9. Jackson Phillips, company controller, estimates that the 2021 year-end current assets and current liabilities will be $2,100,000 and $2,400,000 respectively. These estimates provide a current ratio of only 0.875. Violation of the debt agreement will increase Rantree's borrowing costs as the loans are renegotiated at higher rates.

Jackson proposes to the company president that Raintree purchase inventory of $600,000 on credit before year-end. This will cause both current assets and current liabilities to increase by the same amount, but the current ratio will increase to 0.9. The extra $600,000 in inventory will be used over the later part of 2022. However, the purchase will cause warehousing costs and financing costs to increase.