Question: Suppose that La-Z-Boy in E2-7 signed a debt covenant specifying that current assets must exceed current liabilities by $200 million. Assume further that in early

Suppose that La-Z-Boy in E2-7 signed a debt covenant specifying that current assets must exceed current liabilities by $200 million. Assume further that in early January 2010, the company planned to purchase a $200-million piece of machinery and had two possible methods of paying for it: (1) short-term note payable or (2) long-term note payable. Compute the effect of each alternative on the difference between current assets and current liabilities, and discuss which method seems to be the most feasible.

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