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Liquidity ratios and limitations) Manitoba Manufacturing Inc. (MMI) has a loan from the Canadian National...

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Accounting

Liquidity ratios and limitations) Manitoba Manufacturing Inc. (MMI) has a loan from the Canadian National Bank to help finance its working capital. The terms of the loan are that the bank will lend MMI an amount up to 34% of its inventory balance and 50% of its accounts receivable. One of the loan covenants requires that MMI maintain a current ratio greater than 2. Information related to MMIs current assets and current liabilities is shown in the following table:

In thousands 2020 2019
Cash $126 $158
Accounts receivable 901 848
Inventory 1,969 1,646
Other current assets 226 275
Bank loan, current 406 192
Accounts payable 957 976
Other current liabilities 42 82

Question a) Does MMI satisfy the loan covenant in both years? (Round answers to 1 decimal place, e.g. 18.4.)

2020 2019
Current ratio ______ times ______ times

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