4. Sky Metals, Inc. is a metal fabrication firm that manufactures prefabricated metal parts for customers...

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4. Sky Metals, Inc. is a metal fabrication firm thatmanufactures prefabricated metal parts for customers in a varietyof industries. The firm’s motto is “If you need it, we can makeit.” The CEO of Sky Metals recently held a board meeting duringwhich he extolled the virtues of the corporation. The company, hestated confidently, had the capability to build any product andcould do so using a lean manufacturing model. The firm would soonbe profitable, claimed the CEO, because the company usedstate-of-the-art technology to build a variety of products whilekeeping inventory levels low. As a business press reporter, youhave calculated some ratios to analyze the financial health of thefirm. Sky Metals' current ratios and quick ratios for the past 6years are shown in the following table: 2010 2011 2012 2013 20142015 2015 Current ratio 1.2 1.4 1.3 1.6 1.8 2.2 2.2 Quick ratio 1.11.3 1.2 0.8 0.6 0.4 0.4 What do you think of the CEO’s claim thatthe firm is lean and soon to be profitable?

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YearCurrent ratioQuick ratio201012011020111401302012130120201316008020141800602015220040We know that current ratio current assetscurrent liabilitiesand quick ratio current assets See Answer

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4. Sky Metals, Inc. is a metal fabrication firm thatmanufactures prefabricated metal parts for customers in a varietyof industries. The firm’s motto is “If you need it, we can makeit.” The CEO of Sky Metals recently held a board meeting duringwhich he extolled the virtues of the corporation. The company, hestated confidently, had the capability to build any product andcould do so using a lean manufacturing model. The firm would soonbe profitable, claimed the CEO, because the company usedstate-of-the-art technology to build a variety of products whilekeeping inventory levels low. As a business press reporter, youhave calculated some ratios to analyze the financial health of thefirm. Sky Metals' current ratios and quick ratios for the past 6years are shown in the following table: 2010 2011 2012 2013 20142015 2015 Current ratio 1.2 1.4 1.3 1.6 1.8 2.2 2.2 Quick ratio 1.11.3 1.2 0.8 0.6 0.4 0.4 What do you think of the CEO’s claim thatthe firm is lean and soon to be profitable?