Problem 3 Income statements and balance sheets follow for Snap-On Incorporated. Refer to these financial statements to answer the requirements. Snap-On Incorporated Consolidated Statements of Earnings (Amounts in millions) For the fiscal year ended 2013 2012 Net sales $ 3,056.5 $ 2,937.9 Cost of goods sold (1,583.6) (1,547.9) Gross profit 1,472.9 1,390.0 Operating expenses (1,012.4) (980.3) Operating earnings before financial services 460.5 409.7 Financial services revenue 181.0 161.3 Financial services expenses (55.3) (54.6) Operating income from financial services 125.7 106.7 Operating earnings 586.2 516.4 Interest expense (56.1) (55.8) Other income (expense) -- net (3.9) (0.4) Earnings before income taxes and equity earnings 526.2 460.2 Income tax expense (166.7) (148.2) Earnings before equity earnings 359.5 312.0 Equity earnings, net of tax 0.2 2.6 Net earnings 359.7 314.6 Net earnings attributable to noncontrolling interests (9.4) (8.5) Net earnings attributable to Snap-on Incorporated $ 350.3 $ 306.1 Snap-On Incorporated Consolidated Balance Sheets Fiscal Year End (Amounts in millions) 2013 2012 Cash and cash equivalents $ 217.6 $ 214.5 Trade and other accounts receivable - net 531.6 497.9 Finance receivables - net 374.6 323.1 Contract receivables - net 68.4 62.7 Inventories - net 434.4 404.2 Deferred income tax assets 85.4 81.8 Prepaid expenses and other assets 84.2 84.8 Total current assets 1,796.2 1,669.0 Property and equipment - net 392.5 375.2 Deferred income tax assets 57.1 110.4 Long-term finance receivables - net 560.6 494.6 Long-term contract receivables - net 217.1 194.4 Goodwill 838.8 807.4 Other intangibles - net 190.5 187.2 Other assets 57.2 64.1 Total assets $ 4,110.0 $ 3,902.3 Notes payable and current maturities of long-term debt $ 113.1 $ 5.2 Accounts payable 155.6 142.5 Accrued benefits 48.1 50.6 Accrued compensation 95.5 88.3 Franchisee deposits 59.4 54.7 Other accrued liabilities 243.7 247.9 Total current liabilities 715.4 589.2 Long-term debt 858.9 970.4 Deferred income tax liabilities 143.8 127.1 Retiree health care benefits 41.7 48.4 Pension liabilities 135.8 260.7 Other long-term liabilities 84.0 87.5 Total liabilities 1,979.6 2,083.3 Preferred stock Common stock 67.4 67.4 Additional paid-in capital 225.1 204.6 Retained earnings 2,324.1 2,067.0 Accumulated other comprehensive income (loss) (44.8) (124.2) Treasury stock at cost (458.6) (412.7) Total shareholders equity attributable to Snap-on Inc. 2,113.2 1,802.1 Noncontrolling interests 17.2 16.9 Total shareholders equity 2,130.4 1,819.0 Total liabilities and shareholders equity $ 4,110.0 $ 3,902.3 Required: a. Compute the companys current ratio and quick ratio for fiscal 2013 and 2012. Comment on any observed trend. b. Compute the companys times interest earned and liabilities-to-equity ratio for 2013 and 2012. Comment on any observed trend. c. Summarize your findings in a conclusion about the companys liquidity and solvency. Do you have any concerns about the companys ability to meet its debt obligations?