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Question 2 20 marks You are a loan officer with ABC bank. McFlurry owns two successful Restaurants, each of which has applied to your Bank
Question 2 20 marks You are a loan officer with ABC bank. McFlurry owns two successful Restaurants, each of which has applied to your Bank for a R250, 000 12-month loan for opening a second location. Condensed balance sheets for the two business entities are as follows: NUGGETS RESTAURANT BALANCE SHEET AS AT 31 DECEMBER 2020 BURGER RESTAURANT BALANCE SHEET AS AT 31 DECEMBER 2020 Restaurants are popular and have been successful over the past several years. Nuggets restaurant has been more profitable but the operating results for the two businesses have been quiet similar. You think that restaurant's second location should be successful. On the other hand, you know that restaurants are a very "faddish" type of business and that their popularity and profitability can change quickly. McFlurry is one of the wealthiest people in Balito. He made a fortune estimated at more than R2billion. He is a retired businessman. His restaurants are run by experienced professionals Required 1.Calculate the current ratio and working capital for each business entity a. Based on the information provided in this case which of the businesses do you consider a better credit risk b. What simple measure might you insist upon that would make the other business as good a credit risk as the one you identified in part (a). Explain
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