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Analyze Apache Corporation Apache Corporation (APA) 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): 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?
Financial And Managerial Accounting
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Financial And Managerial Accounting
Analyze Apache Corporation
Apache Corporation (APA) 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):
- 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?
a.
Compute the day’s cash on hand for each year (round all calculations to one decimal place).
Explanation of Solution
Day’s cash on hand: Day’ cash on hand refers to the cash and near cash balances available with a business organization to meet its daily operating expenses. The formula to calculate the day’s cash on hand is:
Compute the day’s cash on hand for year 1:
The Day’s Cash on Hand for year 1 is 20.4 days
b.
Interpret the results.
c.
Identify the ways the company can respond to a liquidity squeeze.
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