firm constructing a new manufacturing plant and financing it with short-term loans, which are scheduled to be converted to first mortgage bonds when the plant is completed, would want to separate the construction loan from its current liabilities associated with working capital when calculating net working capital.

Question

Quizplus · Accepted Answer

Separating the construction loan from the current liabilities associated with working capital when calculating net working capital would provide a more accurate representation of the company's liquidity position. By doing so, the company can have a clearer understanding of its short-term liquidity position and make better financial decisions.

Firm Constructing a New Manufacturing Plant and Financing It with Short-Term