Swim Suits Unlimited is in a highly seasonal business,and the following summary balance sheet data show its assets and liabilities at peak and off-peak seasons (in thousands of dollars):

From this data we may conclude that

Question

Swim Suits Unlimited is in a highly seasonal business,and the following summary balance sheet data show its assets and liabilities at peak and off-peak seasons (in thousands of dollars): ​
 ​
 From this data we may conclude that

Quizplus · Accepted Answer

The fact that Swim Suits' current ratio is higher at off-peak season suggests that the company follows a relatively conservative approach to current asset financing, whereby some of its short-term needs are met by permanent capital. This means that the company has enough liquidity to cover its short-term obligations even during off-peak season when sales are low. Option A is incorrect because the asset and liability maturities do not match exactly. Option B is incorrect because the data do not show whether or not Swim Suits uses short-term discretionary debt to finance its permanent assets. Option D and E are incorrect because income statement and cash flow data are not needed to draw conclusions about the company's current asset financing policy based on the balance sheet data provided.

Swim Suits Unlimited Is in a Highly Seasonal Business,and the Following