a. P5-37. Analysis and Interpretation of Liquidity and Solvency for Competitors Refer to the financial statements of Nike and Adidas presented in P5-36. REQUIRED Compute each company's current ratio and quick ratio for each year. Comment on any chang- es that you observe. b. Compute each company's times interest earned ratio and debt-to-equity ratio for each year. Comment on any observed changes. Compare these two companies on the basis of liquidity and solvency. Do you have any con- cerns about either company's ability to meet its debt obligations? c. NIKE, INC. Balance Sheets ($ millions) May 31, ADIDAS GROUP, AG Balance Sheets ( millions) December 31, 2018 2017 2017 2016 Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets. $ 4,249 996 3,498 5,261 1,130 $ 3,808 2,371 3,677 5,055 1,150 1,598 398 2,315 3,693 641 1,510 734 2,200 3,764 678 Total current assets Property, plant, and equipment, net Goodwill and identifiable intangible assets, net Deferred income taxes and other assets 15,134 4,454 439 2,509 16,061 3,989 422 2,787 $23,259 8,645 2,000 2,684 1,193 14,522 8,886 1,915 3,259 1,116 15,176 Total assets ..... $22,536 $ $ Liabilities and shareholders' equity Current liabilities: Short-term debt.. Accounts payable. Accrued liabilities Income taxes payable. Other current liabilities 342 2,279 3,269 150 331 2,048 3,011 84 136 2,337 2,921 424 473 636 2,697 2,596 402 434 Total current liabilities. Long-term debt.. Other noncurrent liabilities Total shareholders' equity.. Total liabilities and shareholders' equity .. 6,040 3,468 3,216 9,812 $22,536 5,474 3,471 1,907 12,407 6,291 1,005 791 6,435 6,765 1,004 952 6,455 $23,259 14,522 15,176 NIKE, INC. Income Sheets ($ millions) Year ended May 31, ADIDAS GROUP, AG Income Sheets ( millions) Year ended December 31, 2018 2017 2017 2016 Revenues. Cost of sales. 21,218 10,514 $36,397 20,441 15,956 11,511 4,445 54 66 $34,350 19,038 15,312 10,563 18,483 9,383 9,100 7,518 10,703 8,634 4,749 59 (196) 2,069 93 (46) 1,582 74 (28) Gross profit. Total selling and administrative expense Operating profit. Interest expense (income), net. Other expense (income), net Income before income taxes Income tax expense.... Net income from continuing operations Loss from discontinued operations, net of tax Net income. 4,325 2,392 4,886 646 2,022 668 1,536 454 1,933 4,240 1,354 254 1,082 62 $ 1,933 $ 4,240 1,100 1,020