Question

Suppose the following financial data were reported by 3M Company for 2019 and 2020 (dollars in millions). 3M Company Balance Sheets (partial) 2020 2019 Current assets Cash and cash equivalents $ 3,008 $1,833 Accounts receivable, net 3,055 3,100 Inventories 2,630 3,012 Other current assets 1,820 1,506 Total current assets $10,513 $9,451 Current liabilities $ 4,988 $5,830 (a) Calculate the current ratio and working capital for 3M for 2019 and 2020

Answer 1

Answer:

Current ratio

2019  1.62

2020 2.11

Working capital:

2019 $3,621

2020 $5,525

Explanation:

The current ratio formula =current assets/current liabilities

2019:

current assets is $9451

current liabilities=$5,830

current ratio= $9451/$5,830= 1.62  

working capital =current assets-current liabilities=$9451-$5830=$3621

2020

current assets is $10513

current liabilities=$4988

current ratio= $10513/$4988 =2.11

working capital =current assets-current liabilities=$10,513-$4,988=$5525