A company seeking a line of credit at a bank was turned down. Among other things, the

Question:

A company seeking a line of credit at a bank was turned down. Among other things, the bank stated that the company’s 2 to I current ratio was not adequate. Give reasons why a 2 to 1 current ratio might not be adequate.

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...