6. Income statements and balance sheets follow for Beacon Incorporated. Refer to these financial statements to answer the requirements. BEACON INCORPORATED Consolidated Statements of Earnings (Amounts in millions) Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services For the fiscal year ended 2016 2015 $ 3,430.4 $ 3,352.8 (1,720.8) |(1,704.5) 1.709.6 1,648.3 (1,054.1) (1,053.7) 655.5 594.6 Financial services revenue Financial services expenses Operating income from financial services Operating earnings Interest expense Other income (expense) -- net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable to Snap-on Incorporated 281.4 (82.7) 198.7 854.2 (522) (0.6) 801.4 (244.3) 557.1 2.5 559.6 (13.2) $ 546.4 240.3 (70.1) 170.2 764.8 (51.9) (2.4) 710.5 (221.2) 489.3 1.3 490.6 (11.9) |$ 478.7 BEACON INCORPORATED Consolidated Balance Sheets (Amounts in millions) Cash and cash equivalents Trade and other accounts receivable - net Finance receivables.net Contract receivables - net Inventories - net Deferred income tax assets Prepaid expenses and other assets Total current assets Property and equipment - net Deferred income tax assets Long-term finance receivables - net Long-term contract receivables - net Goodwill Other intangibles.net Other assets Total assets Fiscal Year End 2016 2015 $ 77.6 $ 92.8 598.8 562.5 472.5 447.3 88.1 82.1 530.5 497 8 0.0 109.9 116.5 106.3 1,884.0 1.898.7 425 2 413.5 72.8 1063 934.5 772.7 286.7 266,6 895.5 790.1 184.6 195.0 39.9 44.0 14.723.2 4.486.9 Notes payable and current maturities of long-term debt 301.4 18.4 Accounts payable 170.9 148.3 Accrued benefits 52.8 52.1 Accrued compensation 89.8 91.0 Franchisee deposits 66.7 64.4 Other accrued liabilities 307.9 296.3 Total current liabilities 989.5 670.5 Long-term debt 708.8 861.7 Deferred income tax liabilities 13.1 169.8 Retiree health care benefits 36.7 37.9 246.5 227.8 Pension liabilities 193.4 88.5 Other long-term liabilities Total liabilities 2,088.0 $2,0562 Preferred stock Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock at cost Total shareholders' equity attributable to Snap-on Inc. Noncontrolling interests Total shareholders' equity Total liabilities and shareholders' equity 67.4 $ 67.4 317.3 296.3 3,384.9 2.986.9 (498.5) (3642) (653.9) (573.7) 2,617.2 2.412.7 18.0 18.0 2.635 2 2.430.7 $ 4.723 25 4,486.9 Required: a. Compute the company's current ratio and quick ratio for fiscal 2016 and 2015. Comment on any observed trend. b. Compute the company's times interest earned and liabilities-to-equity ratio for 2016 and 2015. Comment on any observed trend. c. Summarize your findings in a conclusion about the company's liquidity and solvency. d. Do you have any concerns about the company's ability to meet its debt obligations? 6. Income statements and balance sheets follow for Beacon Incorporated. Refer to these financial statements to answer the requirements. BEACON INCORPORATED Consolidated Statements of Earnings (Amounts in millions) Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services For the fiscal year ended 2016 2015 $ 3,430.4 $ 3,352.8 (1,720.8) |(1,704.5) 1.709.6 1,648.3 (1,054.1) (1,053.7) 655.5 594.6 Financial services revenue Financial services expenses Operating income from financial services Operating earnings Interest expense Other income (expense) -- net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable to Snap-on Incorporated 281.4 (82.7) 198.7 854.2 (522) (0.6) 801.4 (244.3) 557.1 2.5 559.6 (13.2) $ 546.4 240.3 (70.1) 170.2 764.8 (51.9) (2.4) 710.5 (221.2) 489.3 1.3 490.6 (11.9) |$ 478.7 BEACON INCORPORATED Consolidated Balance Sheets (Amounts in millions) Cash and cash equivalents Trade and other accounts receivable - net Finance receivables.net Contract receivables - net Inventories - net Deferred income tax assets Prepaid expenses and other assets Total current assets Property and equipment - net Deferred income tax assets Long-term finance receivables - net Long-term contract receivables - net Goodwill Other intangibles.net Other assets Total assets Fiscal Year End 2016 2015 $ 77.6 $ 92.8 598.8 562.5 472.5 447.3 88.1 82.1 530.5 497 8 0.0 109.9 116.5 106.3 1,884.0 1.898.7 425 2 413.5 72.8 1063 934.5 772.7 286.7 266,6 895.5 790.1 184.6 195.0 39.9 44.0 14.723.2 4.486.9 Notes payable and current maturities of long-term debt 301.4 18.4 Accounts payable 170.9 148.3 Accrued benefits 52.8 52.1 Accrued compensation 89.8 91.0 Franchisee deposits 66.7 64.4 Other accrued liabilities 307.9 296.3 Total current liabilities 989.5 670.5 Long-term debt 708.8 861.7 Deferred income tax liabilities 13.1 169.8 Retiree health care benefits 36.7 37.9 246.5 227.8 Pension liabilities 193.4 88.5 Other long-term liabilities Total liabilities 2,088.0 $2,0562 Preferred stock Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock at cost Total shareholders' equity attributable to Snap-on Inc. Noncontrolling interests Total shareholders' equity Total liabilities and shareholders' equity 67.4 $ 67.4 317.3 296.3 3,384.9 2.986.9 (498.5) (3642) (653.9) (573.7) 2,617.2 2.412.7 18.0 18.0 2.635 2 2.430.7 $ 4.723 25 4,486.9 Required: a. Compute the company's current ratio and quick ratio for fiscal 2016 and 2015. Comment on any observed trend. b. Compute the company's times interest earned and liabilities-to-equity ratio for 2016 and 2015. Comment on any observed trend. c. Summarize your findings in a conclusion about the company's liquidity and solvency. d. Do you have any concerns about the company's ability to meet its debt obligations