Question: Bianca Company requested a sizeable loan from Provincial Bank to
Bianca Company requested a sizeable loan from Provincial Bank to acquire a large tract of land for future expansion. Bianca reported current assets of $ 1,900,000 ($ 430,000 in cash) and current liabilities of $ 1,075,000. Provincial denied the loan request for a number of reasons, including the fact that the current ratio was below 2. When Bianca 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 Provincial to reconsider the loan application. Based on these abbreviated facts, would you recommend that Provincial approve the loan request? Why? Are the controller’s actions ethical?
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