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Apache: Days’ cash on hand Apache Corporation is an independent energy company that explores, develops, and pro­duces oil and gas products. Apache operates worldwide, including in the United States, Canada, and the North Sea. The profitability of the oil and gas business is highly influenced by the price of crude oil and natural gas, and by the success in finding oil and gas. Selected financial information for Apache for three recent years follows (in millions): Year 3 Year 2 Year 1 Balance sheet, end of year: Cash $ 769 $ 1,906 $ 160 Income statement: Operating expenses 16,575 11,156 11,724 Depreciation expense 10,158 6,289 6,881 A. Determine the days’ cash on hand for each year. (Round all calculations to one decimal place.) B. Interpret the results. C. What are some ways a company can respond to a liquidity squeeze?

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 7, Problem 2ADM
Textbook Problem

Apache: Days’ cash on hand

Apache Corporation is an independent energy company that explores, develops, and pro­duces oil and gas products. Apache operates worldwide, including in the United States, Canada, and the North Sea. The profitability of the oil and gas business is highly influenced by the price of crude oil and natural gas, and by the success in finding oil and gas. Selected financial information for Apache for three recent years follows (in millions):

  Year 3 Year 2 Year 1
Balance sheet, end of year:      
Cash $ 769 $ 1,906 $ 160
Income statement:      
Operating expenses 16,575 11,156 11,724
Depreciation expense 10,158 6,289 6,881
  • A. Determine the days’ cash on hand for each year. (Round all calculations to one decimal place.)
  • B. Interpret the results.
  • C. What are some ways a company can respond to a liquidity squeeze?

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Chapter 7 Solutions

Financial & Managerial Accounting
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