Your company has $100,000 Cash, $32,000 in Accounts Receivable, and $450,000 in Accrued Earned Income Receivable with $450,000 in Current Liabilities. What is the likely maximum bond limit?

To determine the maximum bond limit for a company, it's essential to understand how to evaluate the financial position based on the company's liquid assets and liabilities. The bond limit is typically influenced by the value of cash and receivables available to the company, which can serve as collateral for the bond.

In this scenario, the company has significant cash and accounts receivable. Specifically, it possesses $100,000 in cash and $32,000 in accounts receivable, which together amount to $132,000. Additionally, the company has $450,000 in Accrued Earned Income Receivable, which can also be considered an asset as it represents income that has been earned but not yet received.

When calculating the total assets that can back the bond, you would sum the cash, accounts receivable, and accrued income:

• Cash: $100,000

• Accounts Receivable: $32,000

• Accrued Earned Income Receivable: $450,000

This gives a total of $582,000 in liquid assets. However, when considering the bonding limit, companies often have a policy or formula that allows them to borrow a multiple of their liquidity (assets backing the bond) relative to their liabilities.

In many cases