Expenses increasing faster than revenues. Accounts payable are being used to take cash out of the business for non-business purposes. Accounts payable are being used to increase fixed assets. No problem is evident. Examine the following sets of ratios and identify the business problem the company is most likely experiencing. Situation #2: LIQUIDITY 2016 2017 2018 Current Ratio 1.450 1.460 1.445 0.580 0.585 0.578 Quick Ratio Inventory: Working Capital Current Debt: Inventory 1.266 1.249 1.275 1.755 1.742 1.762 PROFITABILITY Gross Profit: Net Sales 47.00% 45.00% 43.00% -.072% 1.68% 0.48% Profit on Sales Net Profit: Total Assets Net Profit: Net Worth 1.37% 0.39% -0.59% 5.14% 1.45% -2.22% ACTIVITY Sales: Receivables 9.865 9.772 9.912 37.000 37.350 36.825 5.000 4.970 5.015 2.650 2.734 2.859 Days Sales Outstanding Sales: Inventory Inventory Turnover Days Sales Inventory Sales: Net Worth Sales: Working Capital Fixed Assets: Net Worth 137.736 133.524 127.686 3.058 3.014 3.081 6.330 6.207 6.393 1.400 1.381 1.410 Fixed Asset Turnover 2.184 2.182 2.185 0.815 0.813 0.817 9.780 9.735 9.803 Total Asset Turnover Cash Velocity Average Payable Period CAPITAL STRUCTURE 41.000 39.828 37.969 Total Debt: Net Worth 2.750 2.705 2.773 Current Debt: Net Worth 1.074 1.057 1.082 1.676 1.649 1.691 3.470 3.396 3.509 Long Term Debt: Net Worth Long Term Debt: Working Capital Long Term Debt: Fixed Assets Coverage of Fixed Charges 1.197 1.194 1.199 8.400 3.114 -2.171