Underwood Boutique reported the following financial data for 2017 and 2016. Instructions (a) Calculate the current ratio

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Underwood Boutique reported the following financial data for 2017 and 2016.
Underwood Boutique reported the following financial data for 2017 and

Instructions
(a) Calculate the current ratio for Underwood Boutique for 2017 and 2016.
(b) Suppose that at the end of 2017, Underwood Boutique used $1.5 million cash to pay off $1.5 million of accounts payable. How would its current ratio change?
(c) At September 30, Underwood Boutique has an undrawn operating line of credit of $12.5 million. Would this affect any assessment that you might make of Underwood Boutique's short-term liquidity? Explain.

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...
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Accounting Tools for Business Decision Making

ISBN: 978-1118096895

6th edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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