Wesfarmers Limited is a major diversified Australian public company with interests in fertilizer and chemicals manufacturing, gas processing and distribution, coal mining and production, building materials, hardware and forest products, rural and country services, transport, country supermarkets, and insurance. The following schedule summarizes the composition of current assets and current liabilities reported on its June 30, 1996 and June 30, 1997 balance sheets:

Wesfarmers Limited 1997 1996

(Dollars in millions)

Total current assets $761 $688 Inventories included in current assets 368 1 Receivables included in current assets 362 685 Total current liabilities 822 155 Required

a. Based on the information given here, determine the firm’s current ratio and quick ratio at the end of 1997 and 1996.

b. In which year do you consider the firm to be in better financial condition?
Explain.