Turnberry Golf Corporations bond issuances make certain demands on the business. For example, Turnberry may not repurchase common shares in excess of the balance of retained earnings. Also, long-term debt may not exceed shareholders equity and the current ratio may not fall below 1.50. If Turnberry fails to meet any of these requirements, the companys lenders have the authority to take over the management of the company.

Changes in consumer demand during the pandemic have made it hard for Turnberry to attract customers. Current liabilities have mounted faster than current assets, causing the current ratio to fall to 1.47. Before releasing financial statements, Turnberry management is scrambling to improve the current ratio. The controller points out that an investment can be classified as either long-term or short-term, depending on managements intention. By deciding to convert an investment to cash within one year, Turnberry can classify the investment as short-term: a current asset.