Bluestone Metals, Inc., is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The firm's motto is "If you need it, we can make it." The CEO of Bluestone recently held a board meeting during which he extolled the virtues of the corporation. The company, he stated confidently, had the capability to build any product and could do so using a lean manufacturing model. The firm would soon be profitable, claimed the CEO, because the company used state-of-the-art technology to build a variety of products while keeping inventory levels low. As a business press reporter, you have calculated some ratios to analyze the financial health of the firm. Bluestone's current ratios and quick ratios for the past 6 years are shown in the table below:
| |
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
|
Current ratio
|
1.2
|
1.4
|
1.3
|
1.6
|
1.8
|
2.2
|
|
Quick ratio
|
1.1
|
1.3
|
1.2
|
0.8
|
0.6
|
0.4
|
What do you think of the CEO's claim that the firm is lean and soon to be profitable?