Analysis and Interpretation of Liquidity and Solvency

Balance sheets and income statements for Costco Wholesale Corporation follow.

(a) Compute Costcos current ratio and quick ratio for 2018 and 2017. (Round answers two decimal places.)

(a) Compute Costco's current ratio and quick ratio for 2018 and 2017. (Round answers two decimal places.) 2018 current ratio = 0 2017 current ratio = 0 2018 quick ratio = 0 2017 quick ratio = 0 (b) Compute Costco's times interest earned and its liabilities-to-equity ratios for 2018 and 2017. In 2017, Costco reported earnings before interest and tax (EBIT) of $4,111 million and interest expense of $134 million. (Round answers two decimal places.) 2018 times interest earned = 0 2017 times interest earned = 0 2018 liabilities-to-equity = 0 2017 liabilities-to-equity = 0 (c) Summarize your findings about the company's liquidity and solvency. Do you have any concerns about Costco's ability to meet its debt obligations? Costco's liabilities-to-equity ratio decreased thus its solvency has declined. Costco's times interest earned is high thus there is concern for Costco's solvency. Costco's quick and current ratios slightly increased therefore its liquidity has declined. Costco's times interest earned ratio is high thus solvency is not a concern for Costco