The following financial data were reported by Minnesota Mining and Manufacturing (3M) for 1998 and 1997 ($ in millions):

Instructions

(a) Calculate the current and acid-test ratios for 3M for 1998 and 1997.

(b) Suppose that at the end of 1998 3M management used $200 million cash to pay off $200 million of accounts payable. How would its current ratio and acid-test ratio change?

Transcribed Image Text:

MINNESOTA MINING AND MANUFACTURING Balance Sheet (partial) 1998 1997 Current assets Cash and cash equivalents $ 211 $ 230 Short-term investments 237 247 Accounts receivable, net 2,666 2,434 Inventories 2,219 2,399 Other current assets 985 858 Total current assets 6,318 6,168 Current liabilities 4,386 3,983