E$2-14($Algo$)$ Calculating and Evaluating the Current Ratio $[$LO $2-1,$ LO $2-5]$

Carter Sports Company reported the following in recent balance sheets $($amounts in millions$).$

$($in millions$)$June $30,2022$December $31,2021$Assets$$Current Assets$$Cash$ $473$$ $510$Accounts Receivable$1,187512$Inventory$1,445665$Prepaid Rent$8048$Total Current Assets$3,1851,735$Software$472196$Equipment$1,609643$Total Assets$ $5,266$$ $2,574$Liabilities and Shareholders' Equity$$Liabilities$$Current Liabilities$$Accounts Payable$ $835$$ $638$Notes Payable $($short$-$term$)02$Income Tax Payable$795$Total Current Liabilities$914645$Notes Payable $($long$-$term$)186112$Total Liabilities$1,100757$Stockholders$$ Equity$$Common Stock$17556$Retained Earnings$3,9911,761$Total Shareholders$$ Equity$4,1661,817$Total Liabilities and Shareholders$$ Equity$ $5,266$$ $2,574$

Required:

$1.$ Calculate the current ratio at June $30,2022,$ and December $31,2021.$

$2-$a$.$ Did the company$$s current ratio increase or decrease?

$2-$b$.$ What does this imply about the company$$s ability to pay its current liabilities as they come due?

$3-$a$.$ What would Carter Sports current ratio have been on June $30,2022,$ if the company were to have paid down $$10($million$)$ of its Accounts Payable?

$3-$b$.$ 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 June $30,2022?$