The bond indenture for the 20-year, 11% debenture bonds dated January 2, 2007, required working capital of $560,000, a current ratio of 1.5, and a quick ratio of 1.2 at the end of each calendar year until the bonds mature. At December 31, 2008, the three measures were computed as follows:

1.

2. Current Ratio = 1.50 ($600,500/$400,000)
3. Quick Ratio = 2.04 ($511,000/$250,000)
a. List the errors in the determination of the three measures of current position analysis.
b. Is the company satisfying the terms of the bondindenture?

Current assets 95,000 171,000 20,000 4,500 55,000 65,000 Accounts and notes receivable (net).. . . . . Inventories. $600,500 Current liabilities: Accounts and short-term notes payable... $250,000 Total current liabilities 400,000 $200,500