) The following 4 companies want to get a 9 month, $2,000 loan from your bank. You can only lend to one company. You must lend to one company. Which one gets the loan? Assume they all have current liabilities of $3,000.

FIRM current ratio quick ratio cash ratio

A 1.9 .9 .8

B .8 .8 .2

C .7 .3 .1

D .5 .5 .5

Ans.

A. FIRM A

B. FIRM B

C. FIRM C

D. FIRM D