The following financial data were reported by Minnesota Mining and Manu-

Calculate current and acidtest ratios before and after paying accounts payable.

(SO 4) facturing (3M) for 1996 and 1995 (\$ in millions):

\section*{Instructions}

(a) Calculate the current and acid-test ratios for \(3 \mathrm{M}\) for 1996 and 1995.

(b) Suppose that at the end of 1996 3M management used \(\$ 500\) million cash to pay off \(\$ 500\) million of accounts payable. How would its current ratio and acid-test ratio change?

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1996 1995 Current assets Cash and cash equivalents $ 583 $ 485 Other securities 161 287 Accounts receivable, net 2,504 2,398 Inventorics. 2,264 2,206 Other current assets 974 1,019 Total current assets $6,486 $6,395 Current liabilities $3,789 $3,724