M4-17. Risk Analysis Using Liquidity, Solvency and Coverage Ratios 27.6%

7.2 9.9%

1.1 Following are liquidity, solvency and coverage ratios for Pier 1 Imports for two recent fi scal years. Is the company more or less risky to creditors in 2019 compared to 2014? Use the internet to determine what crucial event transpired in February 2020 concerning Pier I Imports. What is your reaction to that news?

Ratio Liquidity ratios Current ratio .......................... • .. • .. . .... . .. .

Quick ratio ......................................... .

Solvency ratios Liabilities-to-equity ratio .... . .. .... .................... .

Total debt-to-equity ratio .............. . . ..... ... ...... .

Coverage ratios Times interest earned . .. .. . .. .. .. ............ . ....... .

Cash from operations to total debt. ... . .. ... . ..... .. ... . . .

Free operating cash flow to total debt .. . ......... . ....... .

2019 1.757 0.282 6.330 2.766

(12.298)

(0.399)

(0.102)

2014 2.168 0.569 0.788 0.021 68.235 16.761 8.308