XYZ Corporation’s 2000 and 1999 balance sheets are summarized below (dollars in millions):

Current Assets 12-31-00 12-31-99 Cash and temporary investments $ 535 $ 499 Receivables, less allowances 706 668 Materials and supplies 211 199 Prepaid and other 213 215 Total current assets 1,665 1,581 Property, plant, and equipment Net property, plant and equipment 11,044 10,778 Investment in affiliates and other companies 302 268 Other assets and deferred charges 713 793 Total assets $13,724 $13,420 Current Liabilities Debt maturing within one year 312 146 Accounts payable and other current liabilities 1,992 1,965 Short-term debt 201 164 Total current liabilities 2,505 2,275 Long-term debt 2,618 3,133 Deferred income taxes 2,570 2,341 Long-term liabilities and deferred gains 2,300 2,491 Shareowners’ equity Common stock and retained earnings 3,731 3,180 Total liabilities and shareowners’ equity $13,724 $13,420 Required

a. With regard to XYZ’s balance sheet, identify any unusual or unfamiliar terms.

Describe your understanding of each new or unfamiliar term.

b. Calculate the current and quick ratios for each year and analyze XYZ’s liquidity.

c. What recommendations would you suggest to XYZ about its liquidity?

d. Calculate and evaluate XYZ’s debt-to-asset ratios for each year. Calculate any other appropriate asset management or debt management ratios.

e. How has XYZ changed its financial management strategies? Do these changes seem to be appropriate? Why?