Calculate the current ratio for each company

Calculate the current ratio for each company - Jeffrey...

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Jeffrey Welter BUS-115 23AUG06 1. Calculate the current ratio for each company. Comparing the ratios, which company is more likely to get the loan? Why? 2. The quick (acid-test) ratio is considered an even more reliable measure of a business’s ability to repay loans than the current ratio. Because inventory is often difficult to liquidate, the value of the inventory is subtracted from the total current assets. Calculate the quick ratio for each business. Do you think either business will get the loan? Why? Businesses that have current rations greater than 2 are considered a safe risk for short term credit. Thingamajigs and Things had a current ration of 5, which is well above 2. WannaBees on the other hand has a current ratio of 1.8 which might cause a few issues for them trying to receive a loan or credit. Thingamajigs and Things will most definitely receive the loan because their current ratio is 5, which means that they have their finances in order. For every $1.00 of debt or liability they have, there is $5.00 in
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This note was uploaded on 12/08/2009 for the course BUSN BUSN1115 taught by Professor Forgot during the Spring '08 term at DeVry Chicago.

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Calculate the current ratio for each company - Jeffrey...

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