Compute and Interpret Solvency Ratios for Business Segments Selected balance sheet and income statement information from Ford Motor Company and its two principal business segments, Automotive and Financial Services, for 2016 follows.

$ millions Pretax Income Interest Expense Net Income Total Liabilities Equity Automotive . . . . . . . . . . . . . . . . . . . $9,422 $ 894 $6,313 $ 79,631 $17,298 Financial services . . . . . . . . . . . . . . 1,820 2,808 1,315 134,317 11,935 Other. . . . . . . . . . . . . . . . . . . . . . . . (4,446) — (3,021) (5,280) 50 Ford Motor, Consolidated. . . . . . . . $6,796 $3,702 $4,607 $208,668 $29,283 Required

a. Compute return on equity (ROE), times interest earned ratio and total liabilities-to-equity for the company’s two business segments and the company as a whole. (Use year-end equity for return on equity calculation.)

b. What is your overall assessment of the company’s credit risk? Explain. What differences do you observe between the two business segments? Do these differences correspond to your prior expectations given each company’s business model?

c. Discuss the implications of the analysis of consolidated financial statements and the additional insight that can be gained from a more in-depth analysis of primary business segments.