Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information for Starbucks for 2018 and 2017 follows.

($ millions)	2018	2017
Cash	$ 8,756.3	$2,462.3
Short-term investments	181.5	228.6
Accounts receivable	693.1	870.4
Current assets	12,494.2	5,283.4
Current liabilities	5,684.2	4,220.7
Short-term debt	349.9	-
Long-term debt	9,090.2	3,932.6
Total liabilities	22,980.6	8,908.6
Interest expense	170.3	92.5
Capital expenditures	1,976.4	1,519.4
Equity	1,175.8	5,457.0
Cash from operations	11,937.8	4,251.8
Earnings before interest and taxes	3,883.3	4,134.7

(a) Compute the following liquidity, solvency and coverage ratios for both years.

Round all your answers to two decimal places.

2018 current ratio = Answer 2017 current ratio = Answer 2018 quick ratio = Answer 2017 quick ratio = Answer 2018 liabilities-to-equity = Answer 2017 liabilities-to-equity = Answer 2018 total debt-to-equity = Answer 2017 total debt-to-equity = Answer 2018 times interest earned = Answer 2017 times interest earned = Answer 2018 cash from operations to total debt = Answer 2017 cash from operations to total debt = Answer 2018 free operating cash flow to total debt = Answer 2017 free operating cash flow to total debt = Answer (b) Which of the following best describes the company's credit risk?

Both the quick and current ratios for 2018 decreased in the past year but are higher than 1.0. Its interest coverage ratio remains high, indicating it has it may have difficulty making interest payments on its debt.

Both the quick and current ratios for 2018 increased in the past year and are higher than 1.0, implying Starbucks is relatively liquid. Starbucks' interest coverage ratio decreased but remains high, indicating it has the ability to cover interest payments on its debt.

Both the quick and current ratios for 2018 decreased in the past year indicating Starbucks may have may have difficulty converting assets to cash. However, its interest coverage ratio remains high, indicating it has the ability to cover interest payments on its debt.

Both the quick and current ratios for 2018 increased in the past year and are higher than 1.0, implying Strabucks is relatively liquid. Starbucks' interest coverage ratio is weak, indicating it may have difficulty making interest payments on its debt.