14. [Sale of receivables; ratio and cash flow effects] Foster Wheeler [FWC] entered into arrangements to sell receivables in 1998 and 1999. The accounts receivable footnote in the firm's 1999 Annual Report noted that As of December 31, 1999 and December 25, 1998, $50 million and $38.4 million, respectively, in receivables were sold under the agreement and are therefore not re- flected in the accounts receivable-trade balance in the Consolidated Balance Sheet. Selected reported financial data for the company follow. Years Ended December (in millions) 1997 1998 1999 Sales $4,060 $4,537 $3,867 Trade accounts receivable 664 720 739 Current assets 1,673 1,615 Current liabilities 1.492 1,472 Total short- and long-term debt 963 961 Stockholders' equity 572 376 Cash flow from operations (113) (59) (6)

a. Compute the impact of the sale of receivables on FWC's re- ceivable turnover ratio and cash cycle for 1998 and 1999.

b. Compute the reported and adjusted (for the sale of receiv- ables) current and debt-to-equity ratios for 1998 and 1999.

c. Discuss the impact of the sale on (the trend of) the firm's cash flow from operations over the period 1997 to 1999