2. 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? O Cash Inventories O 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. Indu. Assets Liabilities Current assets Current liabilities Cash $4,592 $2,952 Accounts $0 payable Accruals Accounts 1,680 1,080 1,013 receivable Inventories 4,928 Notes payable 5,737 3,168 $7,200 5,400 $5,400 $11,200 $6,750 Total current assets Total current liabilities Net fixed assets Long-term 8,250 6,600 bonds Net plant and 8,800 8,800 Total liabilities $15,000 $12,000 equipment Common equity Common stock 3,250 2,600 1,400 Retained 1,750 earnings 5,000 4,000 Total common equity Total assets $20,000 $16,000 Total liabilities $20,000 $16,000 and equity Enter the values of the current and quick ratios for Free Spirit Industries Inc. and LeBron Sports Equipment Inc.: Ratio Free Spirit Industries Inc. LeBron Sports Equipment Inc. Current Quick 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. 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 Inc. has a better ability to meet its short-term liabilities than LeBron Sports Equipment. Inc cannot An increase in the current ratio over time always means that the company's liquidity position is improving. can be converted into One of the most important assumptions behind the calculation of the quick ratio is that the firm's accounts receivable cash within the time period for which credit was granted