Question
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
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 011 2015 2012 1.4 1.2 2013 2014 Current ratio 2.1 1.4 1.3 1.3 1.5 Quick ratio 1213 12 07 0.7 04 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?)Step by Step Solution
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