Maintaining a Current Ratio of 1

question 384

True/False

Maintaining a current ratio of 1.5 or better while ensuring the loan collateral in good working order is an example of a negative covenant.

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Definitions:

Current Value

The present worth of an asset or company, considering its financial standing, market condition, and other factors influencing its valuation at the current time.

Long-term Future

A period of time that extends beyond the immediate future, focusing on developing strategies or goals that will have an impact in the coming years.

Tangible Assets

Physical items of value owned by a business, such as buildings, machinery, or inventory.

Balance Sheet Method

An accounting technique used to estimate the liquidity of a company by analyzing its assets, liabilities, and shareholders' equity at a given point in time.