a.For both companies, compute the quick ratio and the current ratio for fiscal year 2018. Based on the results, which company is more liquid?

b.For both companies, compute the liabilities-to-equity ratio and the times interest earned ratio for fiscal year 2018. Based on the results, which company is more solvent?

c.Do you have any concerns about either company's ability to meet its debt obligations? Explain.

Microsoft Corporation Income Statements For the years ended June 30, 2018 and June 30, 2017 INCOME STATEMENTS - USD ($) shares in Millions, $in 12 Months Ended Millions Jun. 30, 2018 Jun. 30, 2017 Revenue $ 110,360 $ 96,571 [1] Cost of revenue 38,353 34,261 Gross margin 72,007 62,310 [1] Research and development 14,726 13,037 Sales and marketing 17,469 15,461 General and administrative 4,754 4,481 Impairment and restructuring 0 306 Operating income 35,058 29,025 [1],[2 Otherincome (expense), net 1,416 876 [5] Income before income taxes 36,474 29,901 Provision for income taxes 19,903 4,412 Net income $ 16,571 [3] $ 25,489 [1],[2 Earnings per share: Basic $ 2.15 $ 3.29 [1] Diluted $ 2.13 [4] $ 3.25 Weighted average shares outstanding: Basic 7,700 7,746 Diluted 7,794 7,832 Cash dividends declared per common share $ 1.68 $ 1.56 Product Revenue $ 64,497 $ 63,811 Cost of revenue 15,420 15,175 Service and Other Revenue 45.863 32,760 Cost of revenue $ 22,933 $ 19,086 [1] On December 8, 2016, we acquired LinkedIn Corporation. Linkedin has been included in our consolidated results of operations starting on the acquisition date. [2] Indudes $306 million of employee severance expenses primarily related to our sales and marketing restructuring plan, which decreased operating income, net income, and diluted [5] Other Income (Expense), Net details (In millions) Year Ended June 30, 2018, 2017: Dividends and interest income 2214, 1387; Interest expense (2733), (2222) Net recognized gains on investments 2399, 2583; Net losses on derivatives (187), (510) Net losses on foreign currency remeasurements (218), (111); Other, net (59), (251) Total 1416, 876page 5 Microsoft Corporation Balance Sheet As of June 30, 2018 BALANCE SHEETS - USD ($) 5 In Millions Jun. 30, 2018 Jun. 30, 2017 Current assets: Cash and cash equivalents $ 11,946 Short-term Investments 121, 821 125,318 Total cash, cash equivalents, and short-term Investments 133, 768 132,981 Accounts receivable, net of allowance for doubtful accounts of $377 and 5345 25,481 22,431 Inventories 2,181 Other 5,751 5,103 Total current assets 169, 567 162,696 Property and equipment, net of accumulated depreciation of $29,223 and $24,179 29,460 23,734 Operating lease right-of-use assets 5,586 6,565 Equity and other Investments 1.852 6.023 Goodwill 35,683 35,122 Intangible assets, net 8, 053 10,106 Other long-term assets 7,442 6,076 Totalassets 258, 848 250,312 Current llabllItles : Accounts payable 8,617 7,390 Short-term debt 9,072 Current portion of long-term debt 3.938 1,049 Accrued compensation 6,103 5,819 Short-term Income taxes 2,121 718 Short-term unearned revenue 28,905 24,013 Other 8,744 7,684 Total current liabilities 56,48E 55,745 Long-term debt 72,242 75,073 Long-term Income taxes 30,265 13,485 Long-term unearned revenue 3,815 2,643 Deferred Income taxes 541 5,734 Operating lease liabilities 5,568 5,372 Other long-term liabilities 5,211 3,549 Total liabilities 175,130 157,601 Commitments and contingencies Stock holders' equity: Common stock and paid-In capital - shares authorized 24,000; outstanding 7 577 and 7,708 71,223 59.315 Retained earnings 13,682 17,759 Accumulated other comprehensive Income (loss) (2.187] 527 Total stockholders' equity 87, 718 87,711 Total liabilities and stockholders' equity 5 258,848 5 250,312Page 6 Apple Inc. Consolidated Statements of Operations For the years ended September 29, 2018 and September 30. 2017 CONSOLIDATED STATEMENTS OF OPERATIONS - USD (5) 12 Months Ended shares In Thousands, $ In Millions Sep. 29, 2018 Sep. 30, 2017 Income Statement [Abstract] Net sales 5 265,595 5 279,234 Cost of sales 163, 756 141,04 E Gross margin 101, 839 EE,185 Operating expenses: Research and development 14,236 11,581 Selling general and administra tive 16,705 15,261 Total operating expenses 30,941 26,842 Operating Income 70, 895 61,344 Other Income/ [expense), net* 2,005 2,745 Income before provision for Income taxes 72,903 64,089 Provision for Income taxes 13,372 15,73 8 Net Income $ 59,531 5 48,351 Earnings per share: Basic (In dollars per share) 5 12.01 59.27 Diluted (In dollars per share) $ 11.91 59.21 Shares used In computing earnings per share: Basic [In shares) 1,955,377 5,217 242 Diluted (In shares) 5,000, 109 5,251,692 *Other Income/(expense), Net detail for 2018 , 2017 (in millions): Interest and dividend income $ 5,686 $ 5,201 Interest expense (3,240 ) (2,323 ) Other expense, net (441 ) (133 ) Total other income/(expense), net $ 2,005 $ 2,745Page 7 Apple Inc. Consolidated Balance Sheets As of September 29, 2018 CONSOLIDATED BALANCE SHEETS - USD ($)$ In Millions Sep. 29, 2018 Sep. 30, 2017 Current assets: Cash and cash equivalents $ 25,913 $ 20,289 Marketable securitles 40,3BE 53,892 Accounts receivable, net 23, 185 17 874 Inventories 3,956 4,855 Vendor non-trade receivables 25, 809 17,799 Other current assets 12,087 13,935 Total current assets 131,339 128,645 Non-current assets: Marketable securities 170,799 194,714 Property, plant and equipment, net 41,304 33,783 Other non-current assets 22,283 18,177 Total non-current assets 234,385 245,674 Total assets 365,725 375,319 Current llabllItles : Accounts payable 55, EBB 44,242 Other current liabilities 37,687 30,551 Deferred revenue 7,543 7,548 Commercial paper 11,954 11,977 Term debt 8, 784 6,496 Total current liabilities 116, 856 100,814 Non-current llabllitles: Deferred revenue 2,797 2,836 Term debt 93, 735 37,207 Other non-current liabilities 45,180 40,415 Total non-current liabilities 141,712 140 45 8 Total liabilities 256,578 241,272 Commitments and contingencies Shareholders' equity: Common stock and additional paid-In capital, $0.00001 par value: 12,600,000 shares 40,201 35,857 authorized; 4,754,985 and 5,125,201 shares issued and outstanding, respectively Retained earnings 70,400 98,330 Accumulated other comprehensive Income/[loss] (3,454] (150) Total shareholders' equity 107,147 134,047 Total liabilities and shareholders' equity 5 365, 725 5 375,319