Please Help, A discussion in Accounting.

Michael Hechter was recently hired as an assistant controller for Athletic Persuasions, a recognized leader in the promotion of athletic events. However, the past year has been a difficult one for the company's operations. In order to help with slowing sales, the company has extended credit to more customers and accepted payment over longer time periods, resulting in a significant increase in accounts receivable. Similarly, with slowing sales, its inventory of promotional supplies has increased dramatically.

One afternoon, Michael joined the controller, J.P. Sloan, for a visit with their primary lender, First National Bank. Athletic Persuasions had used up its line of credit and was looking to borrow additional funds. In meeting with the loan officer at the bank, Michael was surprised at the positive spin J.P. Sloan put on the company operations. J.P. exclaimed, "Athletic Persuasions continues to prosper in a difficult environment. Our current assets have significantly increased in relation to current liabilities, resulting in a much improved current ratio over the prior year. It seems wherever I look, the company has been successful."

Answer the questions at the end of the story:

Is there anything unethical in the controller's statement to the banker? What should Michael do in this situation? Is it acceptable for Michael just to keep quiet?

AND

What about the current ratio? Is it a useful measure in this situation? What other ratios would be beneficial with the current ratio?