3M Company reported the following financial data for 2009 and 2008 (in millions).
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3M COMPANY |
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Balance Sheet (partial) |
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Current assets |
2009 |
2008 |
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Cash and cash equivalents |
$ 3,040 |
$1,849 |
$1,849 |
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Accounts receivable, net |
3,250 |
3,195 |
3,195 |
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Inventories |
2,639 |
3,013 |
3,013 |
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Other current assets |
1,866 |
1,541 |
1,541 |
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Total current assets |
$10,795 |
$9,598 |
$9,598 |
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Current liabilities |
$ 4,897 |
$5,839 |
$5,839 |
Instructions
(a) Calculate the current ratio for 3M for 2009 and 2008.
(b) Suppose that at the end of 2009, 3M management used $300 million cash to pay off $300 million of accounts payable. How would its current ratio change?