Examine the following sets of ratios and identify the business problem the company is most likely experiencing. Situation 9: LIQUIDITY 2016 2017 2018 Current Ratio 1.530 1.638 1.776 Quick Ratio 0.510 0.558 0.619 1.367 1.219 1.089 1.381 1.287 1.183 43.00% 43.00% 43.00% 8.25% 9.55% 10.75% 7.86% 5.70% 6.81% 15.56% 16.29% 16.53% Inventory:Working Capital Current Debt:Inventory PROFITABILITY Gross Profit:Net Sales Profit on Sales Net Profit:Total Assets Net Profit:Net Worth ACTIVITY Sales:Receivables Days Sales Outstanding Sales:Inventory Inventory Turnover Days Sales Inventory Sales:Net Worth Sales:Working Capital Fixed Assets:Net Worth 16.591 16.506 16.267 22.000 22.113 22.438 3.110 3.205 3.278 1.773 1.827 1.868 205.901 199.822 195.349 1.886 1.705 1.537 4.250 3.905 3.570 1.400 1.213 1.054 1.347 1.406 1.459 Fixed Asset Turnover Total Asset Turnover 0.713 0.731 0.691 6.019 6.121 6.171 42.000 41.947 42.282 1.730 1.391 1.103 Cash Velocity Average Payable Period CAPITAL STRUCTURE Total Debt:Net Worth Current Debt:Net Worth Long Term Debt:NetWorth Long Term Debt:Working Capital Long Term Debt:Fixed Assets Coverage of Fixed Charges 0.837 0.685 0.555 0.893 0.707 0.548 2.011 1.618 1.274 0.638 0.613 0.602 4.600 5.501 6.473 Accounts payable are being used to take cash out of the business for non-business purposes. No problem is evident. o Accounts payable are being used to increase fixed assets. Expenses increasing faster than revenues. 0