Suppose 3M Company reported the following financial data for 2014 and 2013 (in millions).

3M COMPANY Balance Sheet (partial)
2014 2013 Current assets Cash and cash equivalents $ 3,040 $1,849 Accounts receivable, net 3,250 3,195 Inventories 2,639 3,013 Other current assets 1,866 1,541 Total current assets $10,795 $9,598 Current liabilities $ 4,897 $5,839.

Instructions

(a) Calculate the current ratio for 3M for 2014 and 2013.

(b) Suppose that at the end of 2014, 3M management used $300 million cash to pay off $300 million of accounts payable. How would its current ratio change?AppendixLO2