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.