Carlton,Inc

question 60

Multiple Choice

Carlton,Inc.presented the following information in a note to its financial statements for the year ending December 31,2012: The company has a loan agreement with Beachside Bank that states:
1) The current ratio should remain at least 2.0 to 1 at all times.
2) The debt-to-equity ratio should not exceed .7 to 1 at any time.
3) The times-interest-earned should be 5.0 or better.
4) The inventory,turnover should be 4.0 or better.
The ratios at year-end are: current ratio,2.3 to 1;debt-to-equity ratio,.6 to 1;times-interest-earned,7.1;and inventory-turnover,3.7.Which of the following statements is true?

• A)Carlton was in default because of the inventory turnover.
• B)Carlton was in default because of the current ratio.
• C)Carlton was in default because of the debt-to-equity ratio.
• D)Carlton was in default because of the times-interest-earned.

---

Definitions:

Source

The origin from which something comes from, such as data from a sensor, or the initial site of information before it is distributed or used.

Mask

In computing, a method used to control which bits in a byte or word of data are allowed to pass through or be modified.

Destination

The intended final point or place to which something is sent, directed, or transported.

Timer Program

A software routine that allows a computer or device to execute a function or event after a specified interval of time.