Refer to the financial statements of Nike and Adidas presented in PS-36.

REQUIRED:

a. Compute each company's current ratio and quick ratio for each year. Comment on any changes that you observe.

b. Compute each company's times interest earned ratio and debt-to-equity ratio for each year. Comment on any observed changes.

c. Compare these two companies on the basis of liquidity and solvency. Do you have any concerns about either company's ability to meet its debt obligations?

Data from PS-36:

Transcribed Image Text:

ADIDAS GROUP, AG NIKE, INC. Balance Sheets Balance Sheets ($ millions) May 31, (€ millions) December 31, 2018 2017 2017 2016 Assets Current assets: $ 4,249 $ 3,808 2,371 3,677 € 1,598 € 1,510 Cash and cash equivalents Short-term investments Accounts receivable, net 996 3,498 5,261 398 734 2,315 2,200 Inventories... 5,055 3,693 3,764 678 Prepaid expenses and other current assets. 1,130 1,150 641 8,886 1,915 3,259 1,116 Total current assets 15,134 16.061 8,645 Property, plant, and equipment, net. Goodwill and identifiable intangible assets, net 4,454 3,989 2,000 2,684 439 422 Deferred income taxes and other assels 2,509 2,787 1,193 Total assets $22,536 $23,259 €14,522 €15,176 Liabilities and shareholders' equity Current liabilities: Short-term debt. .. 342 $ 331 636 136 2,337 Accounts payable. Accrued liabilities Incomo taxes payablo.. Other current liabilities 2,279 2.048 2,697 2,596 3,269 3,011 2,921 150 84 424 402 473 434 Total current liabilities 6,040 5,474 6,291 Long-term debt.. Other noncurrent liabilities 6,765 1,004 952 3,471 3,468 3,216 9,812 1,005 1,907 791 Total sharehoiders' equity. 12,407 6,435 6,455 Total liabilitios and shareholders' equity.. $22,536 $23,259 €14,522 €15,176