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?

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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