Following are the balance sheets for the years ended June 30, 2018 and 2017 for Seahorse Inc.:

Required:
a. Calculate the current ratio and the quick ratio on June 30, 2017 and 2018.
b. Assess the change in the liquidity position of Seahorse Inc.
c. Can you think of any circumstances where a significant increase in the quick ratio could be an indicator of a deteriorating liquidity position?

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Seahorse Inc. Balance Sheets As of June 30 2018 2017 2018 2017 Liabilities and Shareholders' Equity Assets Current assets Cash and cash equivalents Current liabilities S 95,000 105,000 Accounts payable Accrued liabilities 237,500 145,000 Unearned revenue 275,000 245,000Current portion of long-term debt $175,000 173,750 47,500 30,000 30,000 25,000 Accounts receivable Inventory 112,500 150,000 20,250To Prepaids Current assets Capital assets (net) 18,750 Crr iabilities 342,500401,250 627,750 513,750 932,250 ,025,000Long-term debt Common shares 275,000 387,500 412,500312,500 530,000437,500 Retained earnings Total liabilities and Total assets S1,560,000$1,538,750 shareholders equity $1,560,000 $1,538,750