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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 41
Ethical Decision Making: A Mini-Case
Capital Investments Corporation (CIC) requested a sizable loan from First Federal Bank to acquire a large piece of land for future expansion. CIC reported current assets of $1,900,000 (including $430,000 in cash) and current liabilities of $1,075,000. First Federal denied the loan request for a number of reasons, including the fact that the current ratio was below 2:1. When CIC was informed of the loan denial, the controller of the company immediately paid $420,000 that was owed to several trade creditors. The controller then asked First Federal to reconsider the loan application. Based on these abbreviated facts, would you recommend that First Federal approve the loan request Why Are the controller's actions ethical
Capital Investments Corporation (CIC) requested a sizable loan from First Federal Bank to acquire a large piece of land for future expansion. CIC reported current assets of $1,900,000 (including $430,000 in cash) and current liabilities of $1,075,000. First Federal denied the loan request for a number of reasons, including the fact that the current ratio was below 2:1. When CIC was informed of the loan denial, the controller of the company immediately paid $420,000 that was owed to several trade creditors. The controller then asked First Federal to reconsider the loan application. Based on these abbreviated facts, would you recommend that First Federal approve the loan request Why Are the controller's actions ethical
Explanation
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Current ratio:
Current ratio shows the ...
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
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