selected financial statement data (in millions) for 2020 are presented below. Compute liquidity ratios. End of Year Beginning of Year Cash and cash equivalents $ 795 $ 72 Accounts receivable (net) 2,035 1,942 Inventory 898 900 Other current assets 326 303 Total current assets $4,054 $3,217 Total current liabilities $2,014 $1,601 For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million. Instructions Compute the current ratio, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year.

selected financial statement data (in millions) for 2020 are presented below. Compute liquidity ratios. End of Year Beginning of Year Cash and cash equivalents $ 795 $ 72 Accounts receivable (net) 2,035 1,942 Inventory 898 900 Other current assets 326 303 Total current assets $4,054 $3,217 Total current liabilities $2,014 $1,601 For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million. Instructions Compute the current ratio, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 80BPSB: Ratio Analysis Consider the following information taken from Chicago Water Slides (CWSs) financial...

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E10.18 (LO 5), AN Suppose the following financial data were reported by 3M Company for 2021 and 2022 (dollars in millions). 3M CompanyBalance Sheets (partial) 2022 2021 Current assets Cash and cash equivalents $ 3,040 $1,849 Accounts receivable, net 3,250 3,195 Inventories 2,639 3,013 Other current assets 1,866 1,541 Total current assets $10,795 $9,598 Current liabilities $ 4,897 $5,839 Instructions Calculate the current ratio and working capital for 3M for 2021 and 2022. Suppose that at the end of 2022, 3M management used $300 million cash to pay off $300 million of accounts payable. How would its current ratio and working capital have changed?