ADM 1340 Study Guide - John Wiley & Sons, Maple Leaf Foods, George Trenholm

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: Breid Mc Ilkenny

Document Summary

Sales tax payable [,000 5% + (,000 + ) 8. 5%] Based only on the current ratio, the fruition"s liquidity appears to be relatively stable and strong as there are enough current assets to pay the current liabilities. In order to make proper assessment, information concerning the due dates for the liabilities and the type of current assets that make up the remaining assets would need to be scrutinized. (b) Paying off the ,000,000 improves fruition"s current ratio from 1. 4:1 to 1. 5:1. (c) Having access to an operating line of credit means that cash is available on a short- term basis and therefore the assessment of the company"s short-term liquidity is better than it first appeared. Although the ability to access cash improves the liquidity position, it does not necessarily mean that drawing down the operating line of credit will improve the current ratio.