Mountain-Pacific Railroad, whose financial statements are presented in P5–9, is interested in comparing itself to the rest of the industry. Bob Cleary, the controller, has obtained the following industry averages from a trade journal. (The industry averages were the same for 2016 and 2017.)
Return on equity ...............................0.500
Current ratio .....................................3.100
Quick ratio ........................................1.850
Return on assets .............................0.300
Receivables turnover .....................8.150
Earnings per share ($) .................41.150
Price/earnings ratio .......................0.451
Capital structure leverage ............1.770
Profit margin .................................0.072
Dividend yield ................................0.375
Return on investment ..................0.102
Interest coverage ..........................9.890
Inventory turnover .....................21.700

REQUIRED:
a. Compute these ratios for Mountain-Pacific Railroad for both 2016 (using year-end balances) and 2017 (using average balances where appropriate). Identify significant trends. Could the company experience solvency problems? Explain.
b. Compare the ratios of Mountain-Pacific Railroad to the industry averages. Do you think that Mountain- Pacific Railroad is doing better, worse, or the same as the industry? Explain your answer, being as specific as possible.