A company's liquidity position can be assessed using several ratios that evaluate short-term assets and liabilities and a company's ability to pay short-term debts (Gibson, 2011). These ratios can provide information about a company's ability to repay its debts in the short term (Gibson, 2011). They in turn suggest a firm's ability to service debt in the future (Gibson, 2011). This paper will use the cash flow statement data cited in Gibson (2011) from 3M Company (3M) to better understand liquidity measures to evaluate a company's total liquidity position. The following document will focus on various liquidity calculations, their meaning and their interpretation with respect to 3M. Finally, an overall view of 3M's liquidity position will be assessed. By analyzing a company using ratios, it is possible to evaluate the effectiveness of its management and its strengths and weaknesses (Žager, Sačer, & Dečman, 2012). A company's accounts receivable account constitutes the amounts owed to the company by customers, employees, or the government ( Gibson, 2011 ). The bill typically increases as a result of normal business operations where a company offers products or services to customers on account (Gibson, 2011). A company's days accounts receivable sales are one of two measurement tools used to evaluate the liquidity of a company's accounts receivable (Gibson, 2011). It is considered an indicator of a company's ability to raise funds in relation to the credit terms it offers to its customers (Bujaki & Durocher, 2012; Gibson, 2011). It essentially calculates the average age of a company's receivables at the end of the year (Bujaki & Durocher, 2012; Gibson, 2011). As shown in Exhibit 1, 3M's receivables were 51.28 days old in 2007 and 47.38 days... ... half of the paper ... are the result of actual process improvements and not the effects of changes in accounting methods, easing of credit terms or other manipulations (Gibson, 2011). Any negative trends should be examined and adjustments made to prevent further deterioration of the company's liquidity position. Works Cited Bujaki, M., & Durocher, S. (2012). Industry identification through ratio analysis. Accounting Perspectives, 11(4), 315-322. http://dx.doi.org/10.1111/1911-3838.12003Gibson, C. H. (2011). Financial reporting and analysis: Using financial accounting information. (12th ed.). Mason, OH: South-Western Cengage Learning.Žager, K., Sačer, I., & Dečman, N. (2012). Financial ratios as a tool for evaluating corporate quality in small and medium-sized enterprises. International Journal of Case Management, 14(4), 373-385. Retrieved from http://www.ijmc.org