# Compute and Interpret Coverage, Liquidity and Solvency Ratios Selected balance sheet and income statement information from...

Compute and Interpret Coverage, Liquidity and Solvency Ratios Selected balance sheet and income statement information from Amazon for 2016 through 2018 follows. \$ millions 2018 2017 2016 Net operating profit after tax (NOPAT) \$10,978 \$3,222 \$2,556 Net income 10,073 3,033 2,371 Operating profit 12,421 4,106 4,186 Interest expense 1,417 848 484 Cash from operating activities 30,723 18,365 17,203 Current assets 75,101 60,197 45,781 Current liabilities 68,391 57,883 43,816 Cash and cash equivalents 31,750 20,522 19,334 Marketable securities 9,500 10,464 6,647 Total debt 23,495 24,743 7,694 Assets 162,648 131,310 83,402 Liabilities 119,099 103,601 64,117 Equity 43,549 27,709 19,285 Net operating assets (NOA) 25,794 21,466 998 a. Compute profitability measures RNOA and ROE for 2018 and 2017. In which year are the measures stronger? Round answers to one decimal place (ex: 0.2345 = 23.5%). 2018 2017 RNOA % % ROE % %% b. Compute coverage metrics Times interest earned and Cash from operating activities to total debt for 2018 and 2017. Round answers to two decimal places. 2018 2017 Times interest earned Cash from operating activities to total debt
c. Determine liquidity for the company for 2018 and 2017 by computing the current ratio and quick ratio. Round answers to two decimal places. 2018 2017 Current ratio Quick ratio d. Compute the Total liabilities-to-equity ratio and the Total debt to equity ratio for 2018 and 2017. Round answers to two decimal places. 2018 2017 Total liabilities-to-equity Total debt to equity

The measures are stronger in 2018 as compared to 2017.

Profitability ratios , liquidity ratios are higher in 2018 due to better performance.

Liabilities to equity and debt to equity ratio is higher in 2017 as compared to 2018 .

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