M5-23. Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Verizon Communications, Inc, follows. ($ millions) Current assets Current liabilities. . Total liabilities. Equity... Earnings before interest and taxes. Interest expense. . Net cash flow from operating activities. 2017 2016 $ 29,913 $ 26,395 33,037 30,340 212,456 220,148 43,096 22,524 25,327 25,362 4,733 4,376 25,305 22,810 a. Compute the current ratio for each year and discuss any change in liquidity. How does Verizon's current ratio compare to the median for the telecommunications industry in Exhibit 5.13? What additional information about the numbers used to calculate this ratio might be useful in helping us assess liquidity? Explain. b. Compute times interest earned, the debt-to-equity, and the operating cash flow to current li- abilities ratios for each year and discuss any trends for each. (In 2015, current liabilities totaled $35,052 million.) Compare Verizon's ratios to those that are typical for its industry (refer to Exhibit 5.13). Do you have any concerns about the extent of Verizon's financial leverage and the company's ability to meet interest obligations? Explain. C. Verizon's capital expenditures are expected to remain high as it seeks to respond to competi- tive pressures to upgrade the quality of its communication infrastructure. Assess Verizon's li- quidity and solvency in light of this strategic direction.