P18-2 (similar to) (Related to Checkpoint 18.1) (Measuring firm liquidity) The following table contains current asset and current liability balances for Microsoft Corporation (MSFT): E a. Assume that you are the lead banker for the syndicate of banks that manage Microsoft Corporation's line of credit. Your boss has asked that you report to him on the current state of Microsoft's liquidity. How would you describe the liquidity of Microsoft in 2013? b. Have there been recent changes in Microsoft's liquidity? If so, have the changes been to improve the firm's liquidity? Explain your observations. a. Firm liquidity refers to the ability of the firm to pay its bills in a timely fashion. Which of the following ratios measure a firm's liquidity? (Select the best choice below.) O A. Return on equity and return on assets. X O B. Debt ratio and times interest earned ratio. Data Table C. Earnings per share and dividend per share. OD. Net working capital and current ratio. 2012 Cash and cash equivalents Short-term investments Net receivables Inventory Other current assets Total current assets 2013 9,715,000 12,491.000 14,475,000 892,000 3,004,000 40,577,000 5,337,000 17,038,000 13,899,000 1,258,000 2,504,000 40,036,000 2011 7,502,000 27,233,000 10,610,000 1,400,000 1,103,000 47,848,000 Accounts payable Short-term/current long-term debt Other current liabilities Total current liabilities 11,618,000 0 16,341,000 27,959,000 6,759,00 3,262,000 13,580,000 23,601,000 9,483,000 0 13,294,000 22,777,000 Print Done