Following are the balance sheets for the years ended June 30, 2015 and 2014, for Seahorse Inc.:

Required:

a. Calculate the current ratio and the quick ratio on June 30, 2014 and 2015.

b. Assess the change in the liquidity position of Seahorse Inc.

c. Can you think of any circumstances where a significant increase in the quick ratio could be an indicator of a deteriorating liquidity position?

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Seahorse Inc. Balance Sheets As of June 30 2015 2014 2015 2014 Liabilities and Assets Current assets shareholders' equity Current liabilities Cash and cash Accounts payable $140,000 $139,000 equivalents $ 76,000 $ 84,000 Accrued liabilities 24,000 38,000 Accounts receivable 190,000 116,000 Unearned revenue 20,000 24,000 Inventory 220,000 196,000 Current portion of Prepaids 16,200 15,000 long-term debt 90,000 120,000 Current assets 502,200 411,000 Current liabilities 274,000 321,000 Equipment (net) 745,800 820,000 Long-term debt 220,000 310,000 Capital stock 330,000 250,000 Retained earnings 424,000 350,000 Total liabilities and Total assets $1,248,000 $1,231,000 shareholders' equity $1,248,000 $1,231,000