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A corporate loan applicant has cash of $40, receivables of $50 and inventory of $20. The applicant also has current debts of $50. If the bank's policy requires a current ratio of 1.75 or better and an acid test ratio of 1.25 or better would the applicant receive the loan?

A) Yes because the applicant's current ratio and acid test ratios are acceptable.

B) No because the applicant's current ratio and acid test ratios are both unacceptable.

C) No because although the applicant's current ratio is acceptable, its acid test ratio is not.

D) No because although the applicant's acid test ratio is acceptable, its current ratio is not.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M941390

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