Assume that you are a banker and that each company has applied to you for a 90-day loan of $12,000. Which would you consider to be the more favorable prospect? Explain your answer fully. Williams, Jan. Financial Accounting (p. 85). McGraw-Hill Higher Education. Kindle Edition.

Moon Corporation (I will provide the complete financial information of the two companies in the attachments below.)

Explanation:

A good way to determine a company's credit eligibility is to find its current ratio.

The current ratio is equal to the sum of current assets divided by the sum of current liabilities, and measures a firm's ability to pay its obligations.

According to the information in the attachments, Moon Corporation's Current Assets are $44,000 ($18,000 worth of cash + $26,000 of accounts receivable), and its current liabilities are $22,000 (the sum of notes payable $12,400, and accounts payable $9,600)

The current ratio of Moon Corporation is = $44,000 / $22,000

                                                                                     = 2

Star Corporation's current assets are $14,400, and current liabilities are $65,600.

The current ratio of Star Corporation is = $14,400 / $65,600

                                                                 = 0.21

A much lower number. Thus, Moon Corporation, according to current ratios, is a far more favorable prospect for a loan.

answer assertive;

false is correct i hope.

i might be