Question
In: Accounting
Selected balance sheet and income statement information follows for Snap Inc. and Golden Eagle Inc. for...
Selected balance sheet and income statement information follows for Snap Inc. and Golden Eagle Inc. for the fiscal year ended January 30, 2020.
|
For Fiscal Year Ended Jan. 30, 2020 ($ millions) |
Snap | Golden Eagle |
|---|---|---|
| Income statement information: | ||
| Interest expense | $236 | $6 |
| Income before interest and taxes | 9,296 | 1,932 |
| Balance sheet information: | ||
| Cash and cash equivalents | 7,946 | 1,534 |
| Accounts receivable | 1,692 | 478 |
| Current assets | 24,309 | 4,410 |
| Current liabilities | 15,971 | 2,691 |
| Total assets | 46,333 | 9,833 |
| Total liabilities | 30,554 | 3,422 |
| Total stockholders’ equity | 15,779 | 6,411 |
Required
a. Compute the following ratios for the fiscal year ended January 30, 2020.
- Round your answers to two decimal places (for example, enter 20.46 for 20.455558).
| For Fiscal Year Ended Jan. 30 2020
($ millions) |
Snap |
Golden Eagle |
|---|---|---|
| 1. Current ratio | Answer | Answer |
| 2. Quick ratio | Answer | Answer |
| 3. Total liabilities-to-equity | Answer | Answer |
| 4. Times interest earned | Answer | Answer |
b. Comment on liquidity and solvency comparing the ratio results from the the two companies, assuming all differences are material.
As compared to Golden Eagle, Snap Inc. has a:
| AnswerLower liquidityHigher liquidityLower debt relative to equityHigher debt relative to equityStronger ability to pay interest when dueWeaker ability to pay interest when due | Indicated by the current ratio |
| AnswerLower liquidityHigher liquidityLower debt relative to equityHigher debt relative to equityStronger ability to pay interest when dueWeaker ability to pay interest when due | Indicated by the current ratio |
| AnswerLower liquidityHigher liquidityLower debt relative to equityHigher debt relative to equityStronger ability to pay interest when dueWeaker ability to pay interest when due | Indicated by the current ratio |
| AnswerLower liquidityHigher liquidityLower debt relative to equityHigher debt relative to equityStronger ability to pay interest when dueWeaker ability to pay interest when due | Indicated by the current ratio |
As compared to Golden Eagle Inc., Snap Inc. has:
| AnswerStrongerWeakerAn indeterminable difference in | Liquidity |
| AnswerStrongerWeakerAn indeterminable difference in | Solvency |
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