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Attention: Due to a bug in Google Chrome, this page may not function correctly. Click here to learn more. 1. Liquidity ratios Aa Aa Which of the following asset classes is generally considered to be the least liquid? O Cash O Inventories O Accounts receivable The most recent data from the annual balance sheets of a Company are as follows: Balance Sheet (Millions of dollars) Opera Company- Opera Industries Company Inc. Inc. Assets Current assets Current liabilities $184 Accounts payable so 63 359 422 515 937 Cash Accounts receivable $287 105 68 Accruals 198 Notes payable 450 Total current iabilities 337 Total current assets Net fixed assets Net plant and equipment Long-term bonds 413 550 550 Total debt Common equity Common stock 163 87 203 110 313 1,250 Total common equity Total liabilities and equity 1,000 Total assets 1,250 1,000
450 Total current liabilities 422 515 937 337 Net fixed assets Net plant and Long-term bonds 413 550 550 Total debt Common equity Common stock 203 163 87 250 1,000 Retained earnings Total common equity Total liabilities and equity 313 Total assets 1,250 1,000 Free Spirit Industries Inc.s current ratio is is , and its quick ratio is : Scramouche Opera Companys current ratio , and its quick ratio is . Note: Round your values to four decimal places Which of the following statements are true? Check all that apply. Scramouche Opera Company has a better ability to meet its short-term liabilities than Free Spirit Industries Inc. If a companys current liabilities are increasing faster than its current assets, the companys liquidity position is weakening. An increase in the quick ratio over time usually means that the companys liquidity position is improving and that the company is managing its short-term assets well. Compared to Free Spirit Industries Inc., Scramouche Opera Company has less liquidity and a lower reliance on outside cash flow to finance its short-term obligations D An increase in the current ratio over time always means that the companys liquidity position is improving. O Type here to search
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Cash is the most liquid assets. Accounts receivable is the amount or value of money, which is owned by the customers to the creditors due to credit sales. It is also easy to convert into the cash within the credit period Inventory is the stock produced or manufactured in the factory which is difficult to convert into cash if the sales not taken place within less time Hence, an inventory is the least liquid assets among cash, accounts receivables, and inventory

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