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Compute coverage metrics times interest earned

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Question - Compute and Interpret Coverage, Liquidity and Solvency Ratios

Selected balance sheet and income statement information from Amazon for 2016 through 2018 follows.

$ millions 2018 2017 2016

Net operating profit after tax (NOPAT) $11,307 $3,319 $2,633

Net income 10,375 3,124 2,442

Operating profit 12,794 4,229 4,312

Interest expense 1,332 797 455

Cash from operating activities 31,645 18,916 17,719

Current assets 77,354 62,003 47,154

Current liabilities 64,288 54,410 41,187

Cash and cash equivalents 32,703 21,138 19,914

Marketable securities 9,785 10,778 6,846

Total debt 22,085 23,258 7,232

Assets 167,527 135,249 85,904

Liabilities 111,953 97,385 60,270

Equity 40,936 26,046 18,128

Net operating assets (NOA) 24,246 20,178 938

Required -

a. Compute profitability measures RNOA and ROE for 2018 and 2017. In which year are the measures stronger?

b. Compute coverage metrics Times interest earned and Cash from operating activities to total debt for 2018 and 2017.

c. Determine liquidity for the company for 2018 and 2017 by computing the current ratio and quick ratio.

d. Compute the Total liabilities-to-equity ratio and the Total debt to equity ratio for 2018 and 2017.

Reference no: EM132659174

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