2A2C BOTH THE CURRENT RATIO AND THE QUICK RATIO FOR SPARTAN CORPORATI...
32.
CSO: 2A2a
LOS: 2A2c
Both the current ratio and the quick ratio for Spartan Corporation have been slowly
decreasing. For the past two years, the current ratio has been 2.3 to 1 and 2.0 to 1.
During the same time period, the quick ratio has decreased from 1.2 to 1 to 1.0 to 1. The
disparity between the current and quick ratios can be explained by which one of the
following?
a.
The current portion of long-term debt has been steadily increasing.
b.
The cash balance is unusually low.
c.
The accounts receivable balance has decreased.
d.
The inventory balance is unusually high.