Selected Balance Sheet and Income Statement Information for Two Manufacturing

Essay

Selected balance sheet and income statement information for two manufacturing companies: Stripe, Inc. and Polka-dot Corporation follows:
$\begin{array}{|c|c|c|}\hline & \begin{array}{c}\text { Stripe } \\\text { (in } \$ \text { millions) }\end{array} & \begin{array}{l}\text { Polka-dot } \\\text { (in } \$ \text { millions) }\end{array} \\\hline \text { Cash } & \$ 1,860 & \$ 26,558 \\\hline \text { Marketable securities } & 380 & 110 \\\hline \text { Accounts receivable } & 3,460 & 38,424 \\\hline \text { All other current assets } & 4,306 & 39,986 \\\hline \text { Total current liabilities } & 7,296 & 129,009 \\\hline \text { Total liabilities } & 9,592 & 148,564 \\\hline \text { Total equity } & 12,060 & 121,551 \\\hline \text { Pre-tax income } & 1,280 & 18,830 \\\hline \text { Interest expense } & 105 & 1,791 \\\hline\end{array}$
a. Calculate the current ratio and quick ratio for both companies.
b. Which company is more liquid?
c. Calculate the times-interest-earned ratio and debt-to-equity ratio for both companies.
d. Which company is more solvent?