Towards the last half of 2008, global financial markets and economies fell significantly, resulting in declines in prices of publicly traded securities and reduced demand for our products. As a result, we evaluated selected aspects of our business and financial condition that could be affected.
The effect of record potash, phosphate and nitrogen prices during 2008 exceeded the effect of declines in all segment sales volumes and generated record cash flows from operations for the company. While we expect cash flows for the 2009 fiscal year to be sufficient to fund operations and capital expansions for the year, expected declines in first-quarter sales due to current economic conditions may necessitate the use of additional debt. Although access to the commercial paper market was limited during the second half of 2008, we were able to finance short-term needs through other borrowings. At December 31, 2008, working capital was negative by $348.6 million. With available credit facilities of $760.4 million, we expect liquidity to be sufficient to fund operations, capital expenditures and other investing activities as required. The company continues to have access to debt financing under existing bank credit facilities. The current ratings on our long-term debt are Baa1 with a stable outlook from Moody's and A- with a stable outlook from Standard & Poor's.
Although the values of our investments in other publicly traded companies have decreased from previous highs during the year, the market values continue to exceed cost. Investments also continue to generate earnings and/or dividends for the company, as applicable. Investments in auction rate securities continue to remain illiquid and the fair value declined $38.8 million during the year ($76.5 million in 2007), resulting in a carrying balance of $17.2 million at December 31, 2008.
The decline in plan asset valuations in the company's defined benefit pension plans will require additional future increases in contributions from the company. Recommended contributions as determined by actuarial valuation calculations have increased but are expected to be funded through operations and other sources of financing, if necessary.
The company evaluates the creditworthiness of our major customers on an ongoing basis and there were no significant changes to such customers' ability to pay for product orders during the year. For 2008, $5.0 million of provision for doubtful accounts was recorded while actual bad debts experienced was $3.2 million. Given the slowdown in demand for all three nutrients, we will continue to manage our credit risk relating to trade receivables through our credit management program, and customers that fail to meet specified benchmark credit standards may be required to transact with us on a prepayment basis or some other form of credit support.
The carrying values of our inventories were considered in the context of our accounting policy to record inventories at the lower of average cost and net realizable value. As a result, phosphate and nitrogen inventories were written down by $88.9 million.
Despite declines in phosphate and nitrogen prices, no impairments of long-lived assets or goodwill were recorded for the year ended December 31, 2008.
In the event natural gas prices continue to fall, the company will be required to increase cash deposits to counterparties as required under our agreements. We considered the impact by which our cash flow may be affected and determined that cash flow from operations and financing sources are sufficient to meet our obligations.
Liquidity and capital resources and capital structure and management are discussed in more detail in the following section here.
Total assets were $10,248.8 million at December 31, 2008, an increase of $532.2 million or 5 percent over December 31, 2007. Total liabilities increased by $1,962.0 million from December 31, 2007 to $5,659.9 million at December 31, 2008. Total shareholders' equity declined by $1,429.8 million during the same period to $4,588.9 million.
The largest contributors to the increase in assets during 2008 were additions to property, plant and equipment, increases in accounts receivable and inventories, offset by a decrease in the fair value of available-for-sale securities and cash equivalents. Potash mine expansions were the primary reason for the $924.8 million increase in property, plant and equipment. Although sales for the month of December 2008 declined 4 percent over December 2007, the impact of average realized potash and phosphate prices more than doubling and slower repayments from some customers affected by the economic conditions this year caused accounts receivable to almost double, increasing to $1,189.9 million. Our credit effectiveness index (the industry measure for assessing collection effectiveness) was over 99 percent at December 31, 2008 and 95 percent at February 20, 2009. While our index indicates a very high proportion of our receivables are current, conditions could change as customers adversely affected by the economic crisis could take longer to pay. Inventories increased $286.8 million as demand for all three nutrients declined during the fourth quarter of 2008. Consistent with broad declines in the stock market, the fair value adjustments in Sinofert and ICL caused investments to decline by $830.8 million. We spent $435.4 million to increase our ownership interests in Sinofert and ICL during 2008. Cash and cash equivalents declined $442.7 million and is further discussed here.
Liabilities increased mainly due to increases in our short-term debt ($1,233.9 million) and long-term debt ($400.1 million), which were used to fund our share repurchases. Accounts payable and accrued charges increased $272.1 million as income taxes payable were up $280.7 million due to our increased net earnings; potash production taxes payable were up $19.6 million due to higher potash profits; and accrued payroll was up $25.3 million due to more employees being eligible for the short-term incentive program and due to higher incentive accruals associated with the medium-term incentive program which is paid out every three years. The increase in accounts payable and accrued charges was partially offset as hedge margin deposits, which were $33.9 million last year, were repaid to counterparties as a result of the decline in natural gas prices, and trade payables decreased $34.9 million.
The reduction in shareholders' equity was caused by a $1,521.0 million decline in accumulated other comprehensive income largely stemming from the $1,336.9 million decline in unrealized gains on available-for-sale securities, and a shift from unrealized gains on cash flow hedges of $73.5 million as of December 31, 2007 to unrealized losses of $100.6 million at the end of 2008. Net earnings of $3,495.2 million increased retained earnings while dividends declared of $122.2 million and the $3,250.3 million impact of share repurchases reduced retained earnings. Share capital was affected by both the exercise of stock options and the cancellation of repurchased shares, resulting in a net decrease of $58.8 million.