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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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SOLUTION TO EXERCISE 10-11

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TIP: By reviewing these calculations, M.F. Specie's creditor can tell that the company has a low credit risk. The company's liquid assets are three times greater than its current obligations, i.e. the company does not have to struggle to meet monthly payments. Total debt is relatively low when compared to the total assets the company has access to, and interest expense represents only a small portion of the company's income.

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