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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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