13. [Sale of receivables: ratio effects] Pennzoil-Quaker State [PZL] sells certain of its accounts receivable through its wholly owned subsidiary, Pennzoil Receivables Company, a special limited-purpose corporation The company's net accounts re- cervables sold under this facility totaled $153.1, $115.0, and S103.3 millions at December 31, 1999, 1998, and 1997, respec- tively. Selected reported financial data follow: Years Ended December 31 (in Smilions) Sales Accounts receivable Current assets Current liabilities Total debt Stockholders' equity Cash flow from operations 1999 1998 $2.951 $1,802 312 546 686 2,078 369 1,993 1.096 533 950 1,518 58 (96)

a. Compute the impact of the sale of receivables on Pennzoil's 1999- (i) Current ratio (ii) Cash cycle (iii) Receivable turnover ratio

b. Compute the reported and adjusted (for the sale of receiv- ables) debt-to-equity ratio for 1999.

c. Discuss the impact of the sales on the trend in the firm's cash flow 1998--1999.