Question: The following table contains current asset and current liability balances for Microsoft Corporation (MSFT): 2013 2012 2011 Cash and cash equivalents 9,045,000 6,195,000 7,179,000 Short-term
The following table contains current asset and current liability balances for Microsoft Corporation (MSFT):
| 2013 | 2012 | 2011 | ||||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | 9,045,000 | 6,195,000 | 7,179,000 | |||
| Short-term investments | 13,875,000 | 17,322,000 | 26,223,000 | |||
| Net receivables | 15,021,000 | 13,113,000 | 10,880,000 | |||
| Inventory | 884,000 | 940,000 | 1,238,000 | |||
| Other current assets | 2,466,000 | 2,143,000 | 2,492,000 | |||
| Total current assets | 41,291,000 | 39,713,000 | 48,012,000 | |||
| Accounts payable | 12,646,000 | 6,070,000 | 8,881,000 | |||
| Short-term/current long-term debt | 0 | 2,788,000 | 0 | |||
| Other current liabilities | 16,583,000 | 14,410,000 | 13,492,000 | |||
| Total current liabilities | 29,229,000 | 23,268,000 | 22,373,000 |
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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.)
A.Return on equity and return on assets.
B.Net working capital and current ratio.
C.Debt ratio and times interest earned ratio.
D.Earnings per share and dividend per share.
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