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Analysis and Interpretation of Liquidity and Solvency Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For

Analysis and Interpretation of Liquidity and Solvency Balance sheets and income statements for Costco Wholesale Corporation follow.

Costco Wholesale Corporation
Consolidated Statements of Earnings
For Fiscal Years Ended ($ millions) August 28, 2016 August 30, 2015 August 31, 2014
Revenue
Net Sales $116,073 $113,666 $110,212
Membership fees 2,646 2,533 2,428
Total revenue 118,719 116,199 112,640
Operating expenses
Merchandise costs 102,901 101,065 98,458
Selling, general and administrative 12,068 11,445 10,899
Preopening expenses 78 65 63
Operating Income 3,672 3,624 3,220
Other income (expense)
Interest expense (133) (124) (113)
Interest income and other, net 80 104 90
Income before income taxes 3,619 3,604 3,197
Provision for income taxes 1,243 1,195 1,109
Net income including noncontrolling interests 2,376 2,409 2,088
Net income attributable to noncontrolling interests (26) (32) (30)
Net income attributable to Costco $2,350 $2,377 $2,058

Costco Wholesale Corporation
Consolidated Balance Sheets
($ millions, except par value and share data) August 28, 2016 August 30, 2015
Assets
Current assets
Cash and cash equivalents $3,379 $4,801
Short-term investments 1,350 1,618
Receivables, net 1,252 1,224
Merchandise inventories 8,969 8,908
Deferred income taxes and other current assets 268 228
Total current assets 15,218 16,779
Property and equipment
Land 5,395 4,961
Buildings and improvements 13,994 12,618
Equipment and fixtures 6,077 5,274
Construction in progress 701 811
Gross property and equipment 26,167 23,664
Less accumulated depreciation and amortization (9,124) (8,263)
Net property and equipment 17,043 15,401
Other assets 902 837
Total assets $33,163 $33,017
Liabilities and equity
Current liabilities
Accounts payable $7,612 $9,011
Current portion long-term debt $1,100 $1,283
Accrued salaries and benefits 2,629 2,468
Accrued member rewards 869 813
Deferred membership fees 1,362 1,269
Other current liabilities 2,003 1,695
Total current liabilities 15,575 16,539
Long-term debt, excluding current portion 4,061 4,852
Other liabilities 1,195 783
Total liabilities 20,831 22,174
Equity
Preferred stock, $0.005 par value:
100,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock, $0.005 par value:
900,000,000 shares authorized;
437,524,000 and 437,952,000 shares issued and outstanding 2 2
Additional paid-in-capital 5,490 5,218
Accumulated other comprehensive loss (1,099) (1,121)
Retained earnings 7,686 6,518
Total Costco stockholders equity 12,079 10,617
Noncontrolling interests 253 226
Total equity 12,332 10,843
Total liabilities and equity $33,163 $33,017

(a) Compute Costcos current ratio and quick ratio for 2016 and 2015. (Round answers two decimal places.) 2016 current ratio = Answer 2015 current ratio = Answer 2016 quick ratio = Answer 2015 quick ratio = Answer (b) Compute Costcos times interest earned and its liabilities-to-equity ratios for 2016 and 2015. (Round answers two decimal places.) 2016 times interest earned = Answer 2015 times interest earned = Answer 2016 liabilities-to-equity = Answer 2015 liabilities-to-equity = Answer (c) Which of the following statements best describes Costco's liquidity or solvency?

Costco's liabilities-to-equity ratio increased during 2016 thus its solvency has improved.

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.

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