Free Spirit Industries Inc.'s quick ratio is (0.93, 1.13, 0.75, 0.90), and its current ratio is (1.34, 2.83, 1.84, 2.54); Scramouche Opera Company's quick ratio is (1.40, 1.12, 0.75, 0.93), and its current ratio is (1.66, 3.16, 2.86, 2.16).

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

- Free Spirit Industries Inc. has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than Scramouche Opera Company.

- If a company's current liabilities are increasing faster than its current assets, the company's liquidity position is weakening.

- An increase in the quick ratio over time usually means that the company's liquidity position is improving and that the company is managing its short-term assets well.

- Free Spirit Industries Inc. has a better ability to meet its short-term liabilities than Scamouche Opera Company.

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

Transcribed Image Text:

Balance Sheet December 31st (Millions of Dollars) Scramouche Free Spirit Scramouche Free Spirit ompanyInc. Company Inc. Liabilities Current Assets liabilities Cash $287 $184 Accounts SO S0 Accounts 105 68 Accruals Receivable 308 198 337 Payable Total Current Assets 450 Total current 422 liabilities 337 Net Fixes Assets Long-term 515 413 Net Plant and Equipment Total debt937 550 750 equity Common 203 163 stock Retained110 87 earnings Total equity 313 250 Total Assets 1,000 1,000 liabilities and equity