1. Liquidity ratios Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short-term funds. Which group of lenders would put greater emphasis on a firm's liquidity ratio when evaluating a potential borrower? O Long-term lenders O Short-term lenders The most recent data from the annual balance sheets of Free Spirit Industries Corporation and LeBron Sports Equipment Corporation are as follows: LeBron Sports Equipment Free Spirit Industries Corporation Corporation Assets Balance Sheet December 31 (Millions of dollars) Free Spirit LeBron Sports Industries Equipment Corporation Corporation Liabilities Current liabilities $553 Accounts $0 payable 203 Accruals 190 Current assets Cash $861 315 Accounts receivable Inventaries 924 594 Notes 1,075 1,012 payable Total current $2,100 $1,350 Total current $1,265 $1,012 assets liabilities Net fixed 1,547 1,238 assets Long-term bonds Total debt 1,650 1,650 $2,812 $2,250 Net plant and equipment Common equity Common $610 $488 stock Retained 328 262 earnings Total $938 $750 common equity Total liabilities and Total assets $3,750 $3,000 $3,750 $3,000 equity Free Spirit Industries Corporation's quick ratio is , and its current ratio is ; LeBron Sports Equipment Corporation's quick ratio is , and its current ratio is Which of the following statements are true? Check all that apply. O Free Spirit Industries Corporation has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than LeBron Sports Equipment Corporation. O 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 Corporation has a better ability to meet its short-term liabilities than LeBron Sports Equipment Corporation. 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