Below are the partial financial statements of company LKM Ltd. Partial Financial Statement Information 2021 Cash and cash equivalents € 5 050 Accounts receivable, net € 3 895 Inventories € 1 320 Other current assets € 983 Total current assets € 11 248 Accounts payable € 4 850 Income taxes payable € 2 645 Total current liabilities € 7 495 2020 € 5 100 € 3 195 € 1 888 € 469 € 10 652 € 4 400 € 2 000 € 6 400 a. Calculate the current ratio and working capital for 2021 and 2020. b. Suppose that - at the end of 2021 - management used €2050 cash to pay off €2050 of accounts payable. How would its current ratio and working capital have changed? c. Suppose instead that - at the end of 2021 - management used €4850 cash to pay off €4850 of accounts payable. How would its current ratio and working capital have changed? d. Which of the following two statements is correct i. If "cash and cash equivalents” exceed accounts payable, then management should always pay-off "accounts payable" at the end of the year since the transaction increases the "current ratio".

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