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Compute Liquidity and Solvency Ratios for Competing Firms

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Question - Compute Liquidity and Solvency Ratios for Competing Firms

Halliburton and Schlumberger compete in the oil ?eld services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.

$ millions

HAL

SLB

Cash and equivalents

$2,008

$1,433

Short-term investments

-

1,344

Accounts receivable

5,286

7,960

Current assets

11,151

15,731

Current liabilities

4,850

13,621

Total liabilities

16,438

33,921

Total equity

9,639

36,952

Earnings before interest and tax (EBIT)

2,492

3,081

Interest expense, gross

554

537

Required -

a. Compute the following measures for both companies.

1. Current ratio

2. Quick ratio

3. Times interest earned

4. Liabilities-to-equity

b. Which company appears more liquid?

c. Which company appears more solvent?

Reference no: EM132743826

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