Reference no: EM133004375

Problem 1: Ricky's Remote Race Cars, Inc. has noticed that its inventory turnover number has increased from 5.0 to 15.5 in the last year. What does this mean?

Group of answer choices

Option 1: The company is selling all of its inventory more frequently than it used to.

Option 2: The company is selling all of its inventory less frequently than last year.

Option 3: The company is collecting its money more frequently than it used to.

Option 4: The company's gross margins have shrunk.

Problem 2: Geraldine's Grocery Store noticed that the company's current ratio has increased from 3.50 last year to 7.88 this year. Generally speaking, is this a good thing or a bad thing for the company?

Group of answer choices

Option 1: This is generally considered negative because one's current liabilities have increased.

Option 2: This is a good thing. It means the company has more working capital than it used to and can come up with more cash than it used to be able to.

Option 3: This means nothing. The measurement really is not relevant.

Option 4: This is bad. It means that the company has seen a decrease in current assets and can no longer come up with as much money as it used to.