Calculating and interpreting short-term liquidity ratios Data taken from the financial statements of Nike, a designer and manufacturer of athletic footwear and apparel, appear as follows (amounts in millions):

a. Compute the current and quick ratios on May 31 of each year.

b. Compute the cash flow from operations to current liabilities ratio and the accounts receivable, inventory, and accounts payable turnover ratios for 2005, 2006, and 2007.

c. How has the short-term liquidity risk of Nike changed during the three-yearperiod?

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For the Year 2007 2006 2005 Revenues... $16,326 $14,955 $13,740 Cost of Goods Sold 9,165 8,368 7,624 Net Income. 1,492 1,392 1,212 Cash Flow from Operations. 1,879 1,668 1,571 On May 31 Cash and Marketable Securities. 2005 2007 2006 2004 $1,825 $2,847 $2,303 $1,229 Accounts Receivable.. 2,495 2,383 2,262 2,120 Inventories . 2,077 1,650 2,122 1,811 Prepayments Total Current Assets. 529 613 583 453 $7,346 $6,351 $ 775 $8,077 $5,528 Accounts Payable . $1,040 $ 952 $ 780 Bank Loans 153 131 299 76 Other Current Liabilities. 1,413 1,362 1,148 1,098 Total Current Liabilities $2,584 $2,613 $1,999 $2,031