Question 37. Total Consolidated, Inc. (TCI) accepted a commercial loan two years ago. The loan agreement...

 

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Question 37. Total Consolidated, Inc. (TCI") accepted a commercial loan two years ago. The loan agreement includes the following provision: Borrower shall maintain at all times a Consolidated Total Debt to Capital Ratio, as of the last day of each fiscal quarter and calculated on a Consolidated basis for the four fiscal quarters most recently ended, equal to or less than 1.00. Currently, TCI has $10,000,000 in total assets and $11,500,000 in total liabilities, including $6,000,000 in total debt. TCI has never missed an interest payment under the loan agreement. Is TCI currently in default? (A) Yes, because TCI breached its minimum net worth requirement. (B) No, because TCI never missed an interest payment. (C) No, because TCI's debt-to-equity ratio is less than 1.00. (D) Yes, because TCrs debt-to-total-capital ratio is greater than 1.00. (E) No, because TCI's debt-to-total-capital ratio is less than 1.00. Question 38. Capital Financial Co. ("CFC") needs more capital to fund an upcoming investment. CFC does not want to give up any equity, use a single lender, or enter into a secured debt obligation. Which of the following would be the best choice for CFC to do to raise the money it needs? (A) Issue convertible notes (B) Issue debentures (C) Spread the news that CFC wants to be acquired (D) Issue bonds (E) Obtain a syndicated loan using one of its investments as collateral Question 39. Sales Guru Corp. (SGC") is a private company that provides consulting services to other businesses. SGC uses an innovative model in its services and there are few comparable companies in the relevant market, SGC's balance shoot primarily reflects intangible assets. If you want to determine SGC's value, which approach would be bost to use? (A) A market approach (B) An asset approach (C) An income approach (D) Either (A) or (B) (E) Either (B) or (C) Question 37. Total Consolidated, Inc. (TCI") accepted a commercial loan two years ago. The loan agreement includes the following provision: Borrower shall maintain at all times a Consolidated Total Debt to Capital Ratio, as of the last day of each fiscal quarter and calculated on a Consolidated basis for the four fiscal quarters most recently ended, equal to or less than 1.00. Currently, TCI has $10,000,000 in total assets and $11,500,000 in total liabilities, including $6,000,000 in total debt. TCI has never missed an interest payment under the loan agreement. Is TCI currently in default? (A) Yes, because TCI breached its minimum net worth requirement. (B) No, because TCI never missed an interest payment. (C) No, because TCI's debt-to-equity ratio is less than 1.00. (D) Yes, because TCrs debt-to-total-capital ratio is greater than 1.00. (E) No, because TCI's debt-to-total-capital ratio is less than 1.00. Question 38. Capital Financial Co. ("CFC") needs more capital to fund an upcoming investment. CFC does not want to give up any equity, use a single lender, or enter into a secured debt obligation. Which of the following would be the best choice for CFC to do to raise the money it needs? (A) Issue convertible notes (B) Issue debentures (C) Spread the news that CFC wants to be acquired (D) Issue bonds (E) Obtain a syndicated loan using one of its investments as collateral Question 39. Sales Guru Corp. (SGC") is a private company that provides consulting services to other businesses. SGC uses an innovative model in its services and there are few comparable companies in the relevant market, SGC's balance shoot primarily reflects intangible assets. If you want to determine SGC's value, which approach would be bost to use? (A) A market approach (B) An asset approach (C) An income approach (D) Either (A) or (B) (E) Either (B) or (C)

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Total Consolidated Inc TCI accepted a commercial loan two years ago The loan agreement includes the following provision Borrower shall maintain at all ... View the full answer