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18. Nevada Bank is reviewing the financial statements of Brick Stone Manufacturing Company and Red Stone Manufacturing Company. The current assets and current liabilities for

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18. Nevada Bank is reviewing the financial statements of Brick Stone Manufacturing Company and Red Stone Manufacturing Company. The current assets and current liabilities for both companies are given below. Brick Stone Red Stone 10,000 5,000 Accounts Receivable 30,000 20,000 Inventory 20,000 35,000 Accounts Payable 20,000 30,000 Required: (i) Calculate current ratio and quick ratio for both companies. [2 marks] Current Ratio Based on the ratios, for which company bank will approve the short term loan and why? Give two valid reason for your answer. (1+2=3 marks)

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