A finished ACC-250 Topic 7 creditor ratio briefing example, choosing ratios for one bank's lending decision, computing them for two years and interpreting each result for that bank. Searches like "acc 250 topic 7 assignment example", "acc250 topic 7 sample" and "acc-250 topic 7 example" land here.
What a finished ACC-250 Topic 7 creditor ratio briefing looks like
The finished briefing opens by naming the bank, the loan requested and the question the ratios have to answer: whether the company can service new debt through a downturn. It then computes ratios chosen for that question, the current ratio, the quick ratio, debt to equity, times interest earned and operating cash flow to current liabilities, each for two years, with the formula and the source lines shown. Figures are illustrative and internally consistent. Each ratio gets a sentence of interpretation for the bank, including one case where a ratio improved for a reason a lender would not welcome, a current ratio lifted by slow-moving inventory. The briefing explains why it leaves out ratios an equity investor would lead with, and ends with the covenant levels the results would support, framed as coursework rather than credit advice.
How an ACC-250 Topic 7 example is structured
The briefing is organized around the lender's question rather than a ratio catalog. A short opening paragraph sets out the reader, the loan and the decision, and that paragraph governs which ratios are chosen. A second part lists the selected ratios with formulas and the statement lines each draws from, so the computation can be checked. A third part presents the results for two years beside an illustrative industry benchmark. A fourth part interprets each ratio for the bank, stating whether it supports repayment and why, and flagging the current ratio whose improvement comes from inventory rather than cash. The part after it explains which common ratios were left out and why they matter less to a creditor. The briefing finishes with the covenant levels the analysis would support and the information the bank would still request before deciding.
The lender and the loan first
Naming the bank, the amount and the term before calculating anything determines which ratios belong in the briefing and which would only fill space.
Formulas and source lines shown
Each ratio lists its formula and the statement figures behind it, which lets the result be recomputed rather than taken on trust.
Two years against a benchmark
Results appear for both periods beside an illustrative industry figure, giving the lender a trend and a comparison instead of a single isolated number.
An improvement the bank would question
A higher current ratio driven by slow-moving inventory is read as weaker liquidity, not stronger, because inventory is the current asset furthest from cash.
Ratios deliberately left out
Earnings per share and price multiples are set aside with a reason, since the bank's return is limited to interest and the repayment of principal.
Where marks go in ACC-250 Topic 7
The heaviest deduction here falls on ratios left uninterpreted. A table of results presented to nobody in particular gives the bank no reason to read past it, and rubrics in current classrooms commonly ask for interpretation in so many words. Ratios computed from the wrong lines, such as total liabilities used where the formula calls for interest-bearing debt, are errors a marker can find in seconds. Reading a rising current ratio as good news without asking what drove it misses the analysis this topic centers on. Benchmarks cited with no source, or two years compared with no explanation of what changed, give the interpretation nothing to stand on. Briefings that recommend the loan outright read as credit advice rather than analysis, and many sections expect the conclusion framed as what the ratios support and what they leave unresolved.
Get an ACC-250 Topic 7 example written to your instructions
Send the ACC-250 Topic 7 instructions, the rubric and the company and reader your assignment names. We write a custom example to them, with the reader and decision stated first, ratios chosen for that decision, formulas and sources shown, two years set against a benchmark and every result interpreted for that reader, in 24 to 48 hours. The first one is free.
ACC-250 Topic 7 questions, answered
Which ratios matter most to a lender?
Those bearing on repayment: liquidity ratios such as the current and quick ratios for the short term, leverage ratios such as debt to equity for the cushion beneath the loan, and coverage ratios such as times interest earned for the ability to pay from earnings. Operating cash flow relative to obligations often matters most of all, since loans are repaid in cash rather than income.
Why would a higher current ratio be bad news?
Because the ratio counts every current asset equally, and they are not equally close to cash. If the improvement comes from inventory building up or receivables collecting more slowly, the company holds more current assets that are harder to turn into payment. The quick ratio, which excludes inventory, and the trend in days to collect help a lender tell which kind of improvement it is.
Where can I find an industry benchmark?
Your course may supply one, and some sections point to a database available through the university library. Where a benchmark is used, cite its source and period, and compare like with like, since a figure drawn from a different industry or size of company misleads more than it helps. The example labels its benchmark as illustrative for exactly that reason.