As a Short-Term Creditor Concerned with a Company's Ability to Meet

question 7

Multiple Choice

As a short-term creditor concerned with a company's ability to meet its financial obligation to you,which one of the following combinations of ratios would you most likely prefer?
Current Debt
Ratio TIE ratio

• A) 0.5 0.5 0.33
• B) 1.0 1.0 0.50
• C) 1.5 1.5 0.50
• D) 2.0 1.0 0.67
• E) 2.5 0.5 0.71

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Definitions:

Medical Center

A comprehensive health care facility that provides a wide range of medical services including diagnostics, treatment, and surgery.

Corporation

A corporation is a legal entity that is separate and distinct from its owners, authorized to act as a single entity and recognized as such in law for the purposes of conducting business, borrowing funds, suing, and being sued.

Accounts Payable

Money owed by a company to its creditors for goods or services that have been delivered but not yet paid for.

Fair Value

The estimated market price of an asset or liability, based on current conditions and the willing buyer-seller principle.