Your client, Harper Company, has a contractual commitment as a part of a bond indenture to maintain a current ratio of 2 0 If the ratio falls below that level on the balance sheet date, the entire bond becomes payable immediately In the current year, the client 's financial statements show that the...

The decrease of the current ratio indicates a liqui ...

Your client, Harper Company, has a contractual commitment as a part of a bond indenture to maintain

Question:

Your client, Harper Company, has a contractual commitment as a part of a bond indenture to maintain a current ratio of 2.0. If the ratio falls below that level on the date, the entire bond becomes payable immediately. In the current year, the client's show that the ratio has dropped from 2.6 to 2.05 over the past year. How should this situation affect your audit plan?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...