The Following Information Was Included in a Note to the Current

question 151

Multiple Choice

The following information was included in a note to the current year financial statements of Romeo Productions: The company has a loan agreement with First National Bank that states:
1) The current ratio must be 2.0 or higher at all times.
2) The debt-to-equity ratio must not exceed 0.7 at any time.
3) The times interest earned ratio must be 5.0 or higher.
4) The inventory turnover ratio must be 4.0 or higher.
The company's ratios are: current ratio, 2.3; debt-to-equity ratio, 0.6; times interest earned ratio, 7.1; and inventory turnover ratio, 3.7. Based on this information, the company was in default of its loan agreement because of the

• A)current ratio.
• B)debt-to-equity ratio.
• C)times interest earned ratio.
• D)inventory turnover ratio.

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Definitions:

Employee's Decision

Choices or judgments made by an employee regarding their career path, job responsibilities, or workplace situations.

Organizational Mission Statement

A formal summary of the aims and values of a company, organization, or individual, guiding its goals, strategies, and operational activities.

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Documents signed by employees to indicate their consent or request for representation by a union or for approval of a specific action.

NLRB

The National Labor Relations Board, a federal agency that oversees labor practices in the United States, ensuring workers' right to organize and negotiate collectively.