Following are the current asset and current liability sections of the balance sheets for Freedom Inc. at January 31, 2020 and 2019 (in millions):

January 31, 2020January 31, 2019Current AssetsCash$8$5Accounts receivable69Inventories711Total current assets$21$25Current LiabilitiesNote payable$4$4Accounts payable41Other accrued liabilities33Total current liabilities$11$8

Required:

a.Calculate the working capital and current ratio at each balance sheet date.(Enter "Working capital" in millions of dollars (i.e., 10,000,000 should be entered as 10). Round your "Current ratio" to 2 decimal places.)

b.Evaluate the firm's liquidity at each balance sheet date.

Based on the working capital and current ratio measures, the firm has become more liquid over the 2-year period.

c.Assume that the firm operated at a loss during the year ended January 31, 2020. How could cash have increased during the year?

Changes in a firm's cash position and its profitability are not directly related under accrual basis of accounting.