Following is the current assets and current liabilities portion of the balance sheet of Caribou Coffee for the years ended January 2, 2011, and January 3, 2010:

Required
1. Determine the company's current ratio for each fiscal year. What do the ratios indicate about the liquidity of the company? What were the major causes for any changes in liquidity?
2. Explain why deferred revenue is considered a current liability on the company's balance sheet.

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January 2,2011 January 3,2010 In thousands except per share data Current assets Cash and cash equivalents Accounts receivable, net Other receivables, net Inventories Prepaid expenses and other current assets Total current assets Current liabilities: Accounts payable Accrued compensation Accrued expenses Deferred revenue Total current liabilities $23,092 8,096 1,227 25,931 1,122 $59,468 $23,578 5,887 1,461 13,278 1,546 S 8,080 5,954 6,916 8,726 $29,676 $9,042 6,296 7,563 8,747 $31,648