Summary financial information is provided below for BellSouth Corp., a telecommunications company, and Belk, Inc., a general department store retailer. The financial information for these companies is similar to that of most companies in the telephone communications and department store industries, respectively.

1. Why is the current ratio of the department store 3.008 greater than the current ratio of the telecommunications company?
2. Why is the quick ratio of the department store 1.476 greater than the quick ratio of the telecommunications company?
3. Why are the differences between the current and quick ratios much larger for the department store than they are for the telecommunications company (1.768 vs.0.236)?

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BellSouth Corp (in millions) Dec. 31, 2004 Belk, Inc. (in thousands) Jan. 29, 2005 Amount Amount Cash Accounts receivable Merchandise inventory Materials and supplies Other Total current assets Accounts payable Short-term debt Other Total current liabilities Current ratio Quick ratio 696 2,559 12.2% 44.9% 232,264 319,706 527,860 21.2% 29.1 % 48.1% 321 2,123 S 5,699 1,047 5,475 3,848 5.6% 37.3% 100.0% 10.1% 52.8% 371 % 17,302 $1,097,132 S 177,793 8,199 1.6% 100.0% 57.6% 2.7% 122,397 $ 308,389 39.7% 100.0% $10.370 0.550 0.314 100 0 3.558 1.790 Current Ratio Quick Ratio Difference BellSouth Corp 0.550 0.314 0.236 Belk, Inc 3.558 1.790 1.768 Difference 3.008 1.476