Alquid 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? Cash Inventories 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 Leron Sports Equipment Inc. Industries Inc. Equipment Inc. cilities Free Spirit Industries Inc. Assets Current assets Cash $0 Current abilities Accounts payable Acer 54,305 1,575 30 $2,767 1,013 949 0 Accounts receivable Inventories 2,970 Notes payable 5.379 $6,328 5,062 $5,062 Total current $10.500 56,750 Total current Iliabilities Net fixed assets 7.734 Net plant and Long-term bande Totalbes 6,15 $11,250 8,250 8,250 $14,062 Leren Sports Equipment Inc. Free Spirit Industries Inc. LeBron Sports Equipment Inc. Free Spirit Industries Inc. Liabilities $2,767 Assets Current assets Cash Accounts receivable Inventories Total current 54,305 1,575 Current liabilities Accounts payable Accruals 30 1,013 900 4,620 2,970 5,062 5,379 $6,320 $10.500 $6,50 $5,062 Notes payable Total current abilities Long-term bonds Total abilities 6,188 Netfied Net plant and equipment 8,250 3.250 7,734 $14,062 $11,250 Common Camon stock 2,418 3,047 1.641 1,312 Retained earning Tutal common 3.750 actory $18,750 $15,000 Totallibilities duty $15,000 Enter the values to four decimal places of the current and quick ratios for Free Sovit Industries Inc. and Leon Sports Bipment Inc. Ratio Free Spirit Industries Inc. LeBron Sports Equipment Inc. Qurrent 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. 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. An increase in the quick ratio over time usually means that the company's liquidity position is improving and that the company is managing its short-term assets well Free Spirit Industries Inc. has a better ability to meet its short-term labilities than LeBron Sports Equipment Inc. An increase in the current ratio over time always means that the company's liquidity position is improving. One of the most important assumptions behind the calculation of the quick ratio is that the firm's accounts receivable be converted into cash within the time period for which credit was granted
