Chapter 15 article

http://www.dailytimes.com.pk/default.asp?page=2009%5C03%5C08%5Cstory_8-3-2009_pg5_8

Summary:
This article is talking about the bank in the State may determine the level of current ratio for various types of borrowers by the bank itself. As this policy is published, this means the bank will depend on the situation of each individuals and it will set up a particular required minimum current ratio for the borrowers. Before, the bank has a standard level of current ratio of for a specific industry of which the borrower belongs to. In this case, the banker will ensure that their current assets could able to cover their current liabilities. Once the new policy is established, the risk of the borrowers can not pay back the loan will get higher.

Connection:
In chapter fifteen, it introduces us the different ratios in business. Those ratios are used to determined is that particular company’s in a healthy financial state or not. Different ratios have different meanings and different standards of considering a good, fair, or a poor. For current ratio, it is checking is that company able to cover its current liabilities with its current assets. Usually the standard of saying it is good should be somewhere at two. Current ratio is one of the most important factors that a banker will look at when one is looking at the companies’ financial statements. Bankers will use this number to determined lend out money to the business or not.

Personal Reflection:
I think that if the banks are actually going to determine the ratio level on their own, then it is going to easily bring down the economy of US, which also will affect Canada’s economy. I think that if the bankers are not perfect on make decisions, once they have made the wrong judgments, then many people could turn out not able to pay back their loans and the bank will be in a huge debt. That will eventually cause the bank to bankruptcy and the customers of the banks are going to lost money, so the whole economy is going to be corrupt.