A current ratio of 2.0 indicates:
a. inventories are too high
b. the firm does not have enough cash
c. the firm is using long term liabilities, preferred stock or equity to finance a portion of its current assets
d. the firm is matching financing across the balance sheet
e. the firm is financing fixed assets with current liabilities
A compensating balance is:
a. a bank discount
b. a credit discount given by a bank
c. a rebate
d. a form of inventory financing
e. none of the above
A formal agreement between a bank and a borrower indicating the maximum pre-arranged credit the bank will extend to borrower is:
a. Line of credit
b. Compensating balance
c. Discount loan
d. Operating loan
e. None of the above