Problem: The following information comes from the financial statements of Randall Stewart company:
current assets 80,000
accounts payable 55,000
short term payable 65,000
long term debt 110,000
other long term liabilities 10000
total stockholders equity 180000
Randall has arranged with its bank t refinance its short term loan when it becomes due in three months. The new loan will have a term of five years.
Compute the following ratio value
current ratio
debt to equity ratio
debt ratio
So, my question is due I include the short term payable as current or not?
If you were the auditor of Randall Stewart's financial statements, how would you convince yourself of the validity of the refinancing agreement?