Selected accounts from the SFP of SMI Ltd. at 31 December 20X8 and 20X7 are provided below:

Required:
Calculate the current ratio and quick ratio for SMI for 20X8 and 20X7. Comment on what the ratios reveal.

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(in thousands of dollars) Current assets: Cash and cash equivalents Short-term investments Accounts receivable Inventories Prepaid expenses Total current assets Total current liabilities 20X8 $ 17,100 65,700 373,900 156,900 156,700 $770,300 $451,000 20X7 $ 88,900 75,900 370,100 126,700 45,100 $706,700 $425,000