1. Liquidity ratios A liquid asset can be converted quickly to cash with little sacrifice in its value. Which of the following asset classes is generally considered to be the least liquid? Inventories Plant and equipment Accounts receivable The most recent data from the annual balance sheets of Free Spirit Industries Inc. and LeBron Sports Equipment Inc. are as follows: Balance Sheet December 31" (Millions of dollars) LeBron Sports Free Spirit LeBron Sports Equipment Inc. Industries Inc. Equipment Inc. Free Spirit Industries Inc. Assets Labiiibes Current assets Cash $1,435 $922 Current liabilities Accounts payable Accruals Accounts 525 338 316 receivable Tnventories 1,540 3,500 990 2,250 Notes payable Total current liabilities 1,793 2,109 1,687 1,687 Total current assets Net fixed assets 2,578 2,063 Long-term bonds Total debt 2,750 2,750 4,687 3,750 Net plant and equipment Common equity Common stock Retained 1,016 547 813 437 earnings Total common 1,563 1,250 equity Total assets 6,250 5,000 6,250 5,000 Total liabilities and equity Free Spirit Industries Inc.'s current ratio is , and its quick ratio is , and its quick ratio is ; LeBron Sports Equipment Inc.'s current ratio is Note: Round your values to four decimal places, Which of the following statements are true? Check all that apply, Free Spirit Industries Inc. has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than LeBron Sports Equipment Inc.. A current ratio of 1 indicates that the book value of the company's current assets is equal to the book value of its current liabilities. If a company has a quick ratio of less than 1 but a current ratio of more than 1 and if the difference between the two ratios is large, then the company depends heavily on the sale of its inventory to meet its short-term obligations. Free Spirit Industries Inc, has a better ability to meet its short-term liabilities than LeBron Sports Equipment Inc. An increase in the current ratio over time always means that the company's liquidity position is improving. Grade It Now Save & Continue Continue without saving