BYP18.2 Selected financial ratios for Canadian National Railway (CN) and Canadian Pacific Railway (CP) are presented here for a recent year. CN CP Liquidity Current 0.55:1 0.64:1 ratio Acid-test 0.40:1 0.52:1 ratio Receivables 14.0 10.3 turnover times times Solvency Debt to 55.7% 68.0% total assets Interest 11.6 7.5 coverage times times Free cash $2,778 $887 flow million million Profitability Profit 42.1% 36.7% margin Asset 0.3 0.3 turnover times times Return on assets 14.7% 12.2% 34.8% 43-5% Return on equity Instructions a. Comment on the relative liquidity of the two companies. b. Comment on the relative solvency of the two companies. c. Comment on the relative profitability of the two companies