A liquid asset can be converted to cash quickly without significantly impacting the assets value.

Which of the following asset classes is generally considered to be the most liquid?

Inventories

Accounts receivable

Cash

The most recent data from the annual balance sheets of N&B Equipment Company and Jing Foodstuffs Corporation are as follows:

Balance Sheet December 31st31st (Millions of dollars)

	Jing Foodstuffs Corporation	N&B Equipment Company		Jing Foodstuffs Corporation	N&B Equipment Company
Assets			Liabilities
Current assets			Current liabilities
Cash	$574	$369	Accounts payable	$0	$0
Accounts receivable	210	135	Accruals	127	0
Inventories	616	396	Notes payable	717	675
Total current assets	$1,400	$900	Total current liabilities	$844	$675
Net fixed assets			Long-term bonds	1,031	825
Net plant and equipment	1,100	1,100	Total debt	$1,875	$1,500
			Common equity
			Common stock	$406	$325
			Retained earnings	219	175
			Total common equity	$625	$500
Total assets	$2,500	$2,000	Total liabilities and equity	$2,500	$2,000

N&B Equipment Companys current ratio is , and its quick ratio is ; Jing Foodstuffs Corporations 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.

Jing Foodstuffs Corporation has a better ability to meet its short-term liabilities than N&B Equipment Company.

If a companys current liabilities are increasing faster than its current assets, the companys liquidity position is weakening.

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

Compared to N&B Equipment Company, Jing Foodstuffs Corporation has less liquidity and a lower reliance on outside cash flow to finance its short-term obligations.

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