E4-24. Compute and Interpret Coverage, Liquid ity and Solvency Ratios AMAZON Selected balance sheet and income statement information from Amazon for 2016through2018 follows.

$ millions Net operating profit after tax (NOPAT). . . . . . . . . . . . . . . . . . $
Net income ...................................... .
Operating profit .......................... . .... . ... .
Interest expense ...................... . ....... . ... .
Cash from operating activities ...... .. ... . . ..... . . .. . .
Current assets .................. . ................ .
Current liabilities ................................. . .
Cash and cash equivalents ..................... . ... .
Marketable securities ..................... . .... . .. . .
Total debt ........................... . ....... . .. . .
Assets .......................................... .
Liabilit ies ......... .. ........... ......... .. ..... . . .
Equity .............................. . .. . .... . .. . .
Net operating assets (NOA) ........ . .... . ....... . .. . .
Required 2018 10,978 10,073 12,421 1,417 30,723 75, 101 68,391 31,750 9,500 23,495 162,648 119,099 43,549 25,794 $
2017 2016 3,222 $ 2,556 3,033 2,371 4,106 4,186 848 484 18,365 17,203 60,197 45,781 57,883 43,816 20,522 19,334 10,464 6,647 24,743 7,694 131,310 83,402 103,601 64,117 27,709 19,285 21,466 998

a. Compute profitability measures RNOA and ROE for 2018 and 2017. ln which year are the measures stronger?

b. Compute coverage metrics Times interest earned and Cash from operating activities to total debt for 2018 and 2017. Discuss any trends observed.

c. Determine liquidity for the company for 2018 and 2017 by computing the current ratio and quick ratio. Is the company sufficie ntly liquid? Explain. What additional information about the accounting numbers that make up this ratio might be useful in helping us assess liquidity? Explain.

d. Compute the Total lia bi lities-to-equity ratio and the Total debt to equity ratio for 2018 and 2017.
Discuss any changes observed for each.

e. What is the overall assessment of the company's credit risk from the analyses in parts a through d?