Exercise 10-7 (Part Level Submission) The following financial data were reported

Question

Exercise 10-7 (Part Level Submission) The following financial data were reported by 3M Company for 2009 and 2010 (dollars in millions) 3M Company Balance Sheets (partial) 2010 2009 Current assets Cash and cash equivalents Accounts receivable, net Inventories Other current assets 3,377 3,615 3,155 2,068 $12,215 6,089 3,040 3,250 2,639 1,866 $10,795 4,897 Total current assets Current liabilities (a) Calculate the current ratio and working capital for 3M for 2009 and 2010. (Round current ratio to 2 decimal places, e.g. 1.25: 1.) urrent ratio 2010 2009 Working capital 2010 2009 million million

Explanation / Answer

SOLUTION

Current Ratio = Current assets / Current liabilities

2010-

Current Ratio = $12,215 / $6,089 = 2.00:1

2009-

Current Ratio = $10,795 / $4,897 = 2.20:1

Working Capital - Current assets - Current liabilities

2010-

Working capital = $12,215 - $6,089 = $6,126

2009-

Working capital = $10,795 - $4,897 = $5,898

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