Question: Below is selected balance sheet and income statement information from Scott & Company. a. Compute the following liquidity, solvency and coverage ratios for both years.

Below is selected balance sheet and income statement information from Scott & Company.

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

Current ratio (2014, 2012)

Liabilities-to-equity (2014, 2012)

Times interest earned (2014, 2012)

Cash from operations to total debt (2014, 2012)

Free operating cash flow to total debt (2014, 2012)

b. What is your overall assessment of the companys credit risk? Explain. What differences do you observe between the two years? Please be brief.

(in millions) 2014 2012 Cash $ 1,483.36 $ 1,536.73 Accounts receivable 735.30 1,097.16 Current assets 2,918.33 3,913.56 Current liabilities 6,157.95 3,385.39 Long-term debt 3,611.63 17,620.81 Short-term debt 4,568.83 1,033.96 Total liabilities 26,363.17 23,218.42 Interest expense 1,338.29 1,566.90 Capital expenditures 211.50 1,545.48 Equity 7,152.90 4,587.67 Cash from operations 185.98 110.89 Earnings before interest and taxes 1,902.84 1,594.84

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