Columbia Sportswear Company reported the following in recent balance sheets (amounts in millions).

Required:

1. Calculate the current ratio (rounded to two decimal places) at September 30, 2016, and December 31, 2015.

2. Did the company’s current ratio increase or decrease? What does this imply about the company’s ability to pay its current liabilities as they come due?

3. What would Columbia’s current ratio have been on September 30, 2016, if the company were to have paid down $10 (million) of its Accounts Payable? Does paying down Accounts Payable in this case increase or decrease the current ratio?

4. Are the company’s total assets financed primarily by liabilities or stockholders’ equity at September 30, 2016?

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September 30, 2016 December 31, 2015 (in millions) Assets Current Assets $ 220 $ 370 Cash 372 Accounts Receivable 485 Inventory 590 474 Prepaid Rent 33 33 Total Current Assets 1,328 1,249 Software 135 139 Equipment 459 458 $1,922 $1,846 Total Assets Liabilities and Shareholders’ Equity Liabilities Current Liabilities $ 304 $ 359 Accounts Payable Notes Payable (short-term) Income Tax Payable 29 5 333 366 Total Current Liabilities Notes Payable (long-term) 68 64 Total Liabilities 401 430 Stockholders’ Equity Common Stock 64 30 Retained Earnings 1,457 1,386 Total Shareholders' Equity Total Liabilities and Shareholders' Equity 1,521 1,416 $1,922 $1,846