Compute and Interpret Coverage, Liquidity and Solvency Ratios Selected balance sheet and income statement information from CVS Health Corp. for 2014 through 2016 follows ($ millions).

Total Current Assets Total Current Liabilities EBIT

(Operating income)

Interest Expense, Gross Total Liabilities Equity 2016 . . . . . . . . . . . . . . $31,042 $26,250 $10,338 $1,058 $57,628 $36,834 2015 . . . . . . . . . . . . . . 29,158 23,169 9,454 838 55,234 37,203 2014 . . . . . . . . . . . . . . 25,983 19,027 8,799 600 36,224 37,963 Required

a. Compute times interest earned ratio for each year and discuss any trends for each.

b. Compute the current ratio for each year and discuss any trend in liquidity. Do you believe the company is sufficiently liquid? Explain. What additional information about the accounting numbers comprising this ratio might be useful in helping you assess liquidity? Explain.

c. Compute the total liabilities-to-equity ratio for each year and discuss any trends for each.

d. What is your overall assessment of the company’s credit risk from the analyses in (a), (b), and (c)?

Explain.