The acid-test ratio subtracts the value of the firms inventory from its total current assets. Because inventory

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The acid-test ratio subtracts the value of the firm’s inventory from its total current assets. Because inventory is often difficult to sell, this ratio is considered an even more reliable measure of a business’s ability to repay loans than the current ratio.

Calculate the acid-test ratio for each business and decide whether you would give either the loan. Why or why not?

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