Chapter Cases Quality Home Health Quality Home Health (QHH) has been expanding rapidly over the past ve years. Although paper prots (i.e., earnings that are shown on reports but may not translate into actual cash in the bank) have been stable at about 3.5 percent ofoperating revenues, the liquidity ofthe company has become a concern. You, the CFO, have noted that days cash on hand has dropped to 12 and that the current ratio has decreased to 0.4, while days in accounts receivable has increased to 122 and inventory turnover has decreased sub- stantially. The CEO would like you to answer the following questions: 1. Why does cash flow and liquidity become a problem during company growth? 2. How can a company have healthy prots but lack funds to pay basic expenses? 3. What is the relationship between liquidity and accounts receivable? 4. What could QHH do to improve its liquidity