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Chucks Contracting has a current ratio of 3.7 and a quick ratio of 1.05. He is getting ready to go the bank to ask for
Chucks Contracting has a current ratio of 3.7 and a quick ratio of 1.05. He is getting ready to
go the bank to ask for a loan to build yet another business complex. He is unsure of how the
bank will interpret these ratios. He asks you the following:
a. What factors, (accounts) could cause the current ratio to be so much higher than the quick ratio?
b. Will the bank give Chuck's Contracting the loan? Why or why not?
c. How can Chuck's Construction improve the quick ratio? List specific actions to take.
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