Analysis of financial statement ratios affected by cost flow assumptions. An annual report of General Motors Corporation contained the following in the section "Financial Review: Management's Discussion and Analysis." (Dates have been changed for convenience.)

General Motors' liquidity can be measured by its current ratio (ratio of current assets to current liabilities). For the years ended December 31, Year 2 and Year I. the cunent ratio, based on LIFO inventories, was 1.13 and 1.09, respectively. The LIFO method, while improving Corporate cash flow, adversely affects the current ratio. ... If inventories were valued at FIFO, the current ratio would be 1.21 and 1. 1 8, at the ends of Year 2 and Year I, respectively.

Assume an income tax rate of 34 percent. Also assume that current assets were

$14,043 million and $13,714 million at the end ofYear 2 and Year 1, respectively.

a. Compute the difference between FIFO and LIFO inventories at the ends ofYear 2 and Year 1

.

b. How did the use of LIFO affect cash flow for Year 2?

c. By how much has the use of LIFO improved cash flow since the time it was adopted?