Bluestone? Metals, Inc., is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The? firm's motto is? "If you need? it, we can make? it." The CEO of Bluestone recently held a board meeting during which he extolled the virtues of the corporation. The? company, he stated? confidently, had the capability to build any product and could do so using a lean manufacturing model. The firm would soon be? profitable, claimed the? CEO, because the company used? state-of-the-art technology to build a variety of products while keeping inventory levels low. As a business press? reporter, you have calculated some ratios to analyze the financial health of the firm.? Bluestone's current ratios and quick ratios for the past 6 years are shown in the table? below:

	2010	2011	2012	2013	2014	2015
Current ratio	1.2	1.5	1.3	1.5	1.7	2.2
Quick ratio	1.1	1.3	1.1	0.8	0.7	0.3

What do you think of the? CEO's claim that the firm is lean and soon to be? profitable? (Hint: Is there a possible warning sign in the relationship between the two? ratios?)

?(Select all the answers that? apply.)

A.

Since inventory is included in the calculation of the current? ratio, but not in the quick? ratio, the ratios indicate that inventory is increasing and Bluestone is not operating in a lean manufacturing mode.

B.

The current ratio provides a better measure of overall liquidity only when a? firm's inventory cannot be easily converted into cash.

C.

The current ratio is increasing but the quick ratio is declining.

D.

As with any analysis using? ratios, you should investigate other financial ratios for Bluestone to further assess its financial health.