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 $1,899 Accounts receivable, net 3,110 3,065 Inventories 2,675 3,017 Other current assets 1,890 1,542 Total current assets $10,683 $9,523 Current liabilities $ 4,974 $5,821 (a) Calculate the current ratio and working capital for 3M for 2019 and 2020.

Answer 1

Current ratio = Current Assets / Current Liability

Current ratio 2019 = 9,523 / 5,821

Current ratio 2019 = 1.64 : 1

Current ratio 2020 = 10,683 / 4,974

Current ratio 2020 = 2.15 : 1

Working Capital = Current asset - Current liability

Working capital 2019 = $9,523 - $5,821

Working capital 2019 = $3,702

Working capital 2020 = $10,683 - $4,974

Working capital 2020 = $5,709