Question

The most recent data from the annual balance sheets of Free Spirit Industries Corporation and LeBron Sports Equipment Corporation are as follows:

Balance Sheet December 31st31st (Millions of dollars)

	LeBron Sports Equipment Corporation	Free Spirit Industries Corporation		LeBron Sports Equipment Corporation	Free Spirit Industries Corporation
Assets			Liabilities
Current assets			Current liabilities
Cash	$1,435	$922	Accounts payable	$0	$0
Accounts receivable	525	338	Accruals	316	0
Inventories	1,540	990	Notes payable	1,793	1,687
Total current assets	$3,500	$2,250	Total current liabilities	$2,109	$1,687
Net fixed assets			Long-term bonds	2,578	2,063
Net plant and equipment	2,750	2,750	Total debt	$4,687	$3,750
			Common equity
			Common stock	$1,016	$813
			Retained earnings	547	437
			Total common equity	$1,563	$1,250
Total assets	$6,250	$5,000	Total liabilities and equity	$6,250	$5,000

Free Spirit Industries Corporation’s current ratio is   , and its quick ratio is   ; LeBron Sports Equipment Corporation’s current ratio is   , and its quick ratio is   . Note: Round your values to four decimal places.

Which of the following statements are true? Check all that apply.

Free Spirit Industries Corporation has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than LeBron Sports Equipment Corporation.

A current ratio of 1 indicates that the book value of the company’s current assets is equal to the book value of its current liabilities.

If a company has a quick ratio of less than 1 but a current ratio of more than 1 and if the difference between the two ratios is large, then the company depends heavily on the sale of its inventory to meet its short-term obligations.

Free Spirit Industries Corporation has a better ability to meet its short-term liabilities than LeBron Sports Equipment Corporation.

An increase in the current ratio over time always means that the company’s liquidity position is improving.

Answer 1

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ACCOUNTS latest - Microsoft Excel (Product Activation Failed) View Add-Ins Formulas Data Review - 2x Dr General 11 V AA === A * Wrap Text Merge & Center - AutoSum27 $ -% File Home Insert Page Layout % Cut Calibri Ea Copy Paste BI U D Format Painter Clipboard Font BR315 for BQ Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Formatting as Table Styles Styles Find & Select Alignment Number Cells BR BS BT BU B V BW BY BA 315 316 317 318 319 320 321 CURRENT ASSETS CURRENT LIABILITIES INVENTORY CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES QUICK RATIO = (CURRENT ASSETS - INVENTORY)/CURRENT LIABILITIES BX LEBRON 3500 2109 1540 1.6596 0.9294 FREE SPIRIT 2250 1687 990 1.3337 0.7469 322 FREE SPIRIT INDUSTRIES CURRENT RATIO IS 1.3337 AND QUICK RATIO IS 0.7469 A LEBRON SPORTS CORPORATION'S CURRENT RATIO IS 1.6596 AND QUICK RATIO IS 0.9294 323 324 325 326 327 328 CHECK ALL THAT APPLY: TRUE STATEMENTS Free Spirit Industries Corporation has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than LeBron Sports Equipment Corporation. 329 A current ratio of 1 indicates that the book value of the company's current assets is equal to the book value of its current liabilities. 330 331 332 If a company has a quick ratio of less than 1 but a current ratio of more than 1 and if the difference between the two ratios is large, then the company depends heavily on the sale of its inventory to meet its short-term obligations. budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float B-S profit loss SALES BUDGET dupont DIFF ANALYSIS Ovel I BOU 130% -_ FIFO O ► Rea CASH BUDGET ferences 0 DO 4 * 4 0 ENG 18-09-2019