Questo 2 Tres remaing Marked out of 1100 estion Compute and interpret Coverage, Liquidity and Solvency Ratios Selected balance sheet and income statement information from CVS Health Corp. for 2014 through 2016 follows (5 millions), Total Current Assets Total Current Liabilities EBIT (Operating Income) Interest Expense, Gross Total Liabilities Equity 2016 $29. 01 2 6.250 $10.152 57.628 53401 27159 3 1189 9263 55.234 3.204 19. 027 613 3234 35964 a. Compute times interest earned ratio for each year and discuss any trends for each. Round answers to one decimal place. Year THE Ratio 2014 Based on your computations above, select the most appropriate answer Times interest earned has steadily increased since 2014 Times interest earned has steadily decreased since 2014 Times interest earned has remained the same since 2014 Times interest earned increased in 2015 but then decreased in 2016. b. Compute the current ratio for each year and discuss any trend in liquidity. Round answers to one decimal place 2016 Do you believe the company is sufficiently liquid? Explain. CVS's current ratio has increased over the past three years and is greater than 1. indicating CVS is liquid. CVS's current ratio has decreased over the past three years and it is currently less than 1 indicating CVS is not liquid CV5's current ratio has increased over the past three years, however, it remains less than 1 indicating CVS is not liquid OCVS's current ratio has decreased over the past three years, however, it is greater than indicating CVS is liquid c. Compute the total liabilities to equity ratio for each year and discuss any trends for each Round answers to one decimal place. Year Limites te Equity Based on your computations above, select the most appropriate answer OCVS's liabilities to equity ratio has increased since 2014 however, the ratio is relatively low, conduding CVS is solvent CV blies to equity ratio has decreased since 2014 remaining relatively low, concluding CVS is solvent OCVSslabrities to equity ratio has increased since 2014 and is relatively high concluding CVS is insolvent OCVS liabilities to equity has decreased since 2014 remaining relatively low.concluding CVS is insolvent d. What is your overall assessment of the company's credit risk from the analyses in (all and (c? OCVS is a low credit risk as it has a low level of debt, is liquid and can easily meet its interest expenses. OCVS is a low credit risk as its b esto equity ratio current ratio, and times interest earned ratio have all decreased since 2014 OCVS is a medium to high credit risk as its level of debt has increased and its current rate and times interest ratio have decreased ocy is a medium to credit risk b este equitate, current rate and times interest earnedrapee creased since 2015 Check Questo 2 Tres remaing Marked out of 1100 estion Compute and interpret Coverage, Liquidity and Solvency Ratios Selected balance sheet and income statement information from CVS Health Corp. for 2014 through 2016 follows (5 millions), Total Current Assets Total Current Liabilities EBIT (Operating Income) Interest Expense, Gross Total Liabilities Equity 2016 $29. 01 2 6.250 $10.152 57.628 53401 27159 3 1189 9263 55.234 3.204 19. 027 613 3234 35964 a. Compute times interest earned ratio for each year and discuss any trends for each. Round answers to one decimal place. Year THE Ratio 2014 Based on your computations above, select the most appropriate answer Times interest earned has steadily increased since 2014 Times interest earned has steadily decreased since 2014 Times interest earned has remained the same since 2014 Times interest earned increased in 2015 but then decreased in 2016. b. Compute the current ratio for each year and discuss any trend in liquidity. Round answers to one decimal place 2016 Do you believe the company is sufficiently liquid? Explain. CVS's current ratio has increased over the past three years and is greater than 1. indicating CVS is liquid. CVS's current ratio has decreased over the past three years and it is currently less than 1 indicating CVS is not liquid CV5's current ratio has increased over the past three years, however, it remains less than 1 indicating CVS is not liquid OCVS's current ratio has decreased over the past three years, however, it is greater than indicating CVS is liquid c. Compute the total liabilities to equity ratio for each year and discuss any trends for each Round answers to one decimal place. Year Limites te Equity Based on your computations above, select the most appropriate answer OCVS's liabilities to equity ratio has increased since 2014 however, the ratio is relatively low, conduding CVS is solvent CV blies to equity ratio has decreased since 2014 remaining relatively low, concluding CVS is solvent OCVSslabrities to equity ratio has increased since 2014 and is relatively high concluding CVS is insolvent OCVS liabilities to equity has decreased since 2014 remaining relatively low.concluding CVS is insolvent d. What is your overall assessment of the company's credit risk from the analyses in (all and (c? OCVS is a low credit risk as it has a low level of debt, is liquid and can easily meet its interest expenses. OCVS is a low credit risk as its b esto equity ratio current ratio, and times interest earned ratio have all decreased since 2014 OCVS is a medium to high credit risk as its level of debt has increased and its current rate and times interest ratio have decreased ocy is a medium to credit risk b este equitate, current rate and times interest earnedrapee creased since 2015 Check
