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Clayton Industries has the following account balances: Current assets $ 24,000 Current liabilities $ 8,000 Noncurrent assets 89,000 Noncurrent liabilities 54,000 Stockholders’ equity 51,000 The company wishes to raise $34,000 in cash and is considering two financing options: Clayton can sell $34,000 of bonds payable, or it can issue additional common stock for $34,000. To help in the decision process, Clayton’s management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton’s management. (Note: Round your answers to 2 decimal places.)

Clayton Industries has the following account balances: Current assets $ 24,000 Current liabilities $ 8,000 Noncurrent assets 89,000 Noncurrent liabilities 54,000 Stockholders’ equity 51,000 The company wishes to raise $34,000 in cash and is considering two financing options: Clayton can sell $34,000 of bonds payable, or it can issue additional common stock for $34,000. To help in the decision process, Clayton’s management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton’s management. (Note: Round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Clayton Industries has the following account balances: Current assets $ 24,000 Current liabilities $ 8,000 Noncurrent assets 89,000 Noncurrent liabilities 54,000 Stockholders’ equity 51,000 The company wishes to raise $34,000 in cash and is considering two financing options: Clayton can sell $34,000 of bonds payable, or it can issue additional common stock for $34,000. To help in the decision process, Clayton’s management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio.

Required a-1. Compute the current ratio for Clayton’s management. (Note: Round your answers to 2 decimal places.)

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