Compute Liquidity and Solvency Ratios for Competing Firms Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements. $ millions Cash and equivalents Short-term investments. Accounts receivable Current assets Current liabilities Total liabilities Total equity HAL SLB $2,008 $1,433 1,344 5,077 7,645 11,151 15,731 4,658 13,081 16,438 33,921 9,258 35,488 Earnings before interest and tax (EBIT) 2,393 2,959 Interest expense, gross 554 537 a. Compute the following measures for both companies. Note: Round your final answers to two decimal places (for example, enter 6.78 for 6.77555). HAL 2.28 x 1.5 x 4.54 x 1.69 x SLB 1.114 x 0.79 x 5.79 x 0.91 x 1. Current ratio 2. Quick ratio 3. Times interest earned 4. Liabilities-to-equity b. Which company appears more liquid? HAL c. Which company appears more solvent? SLB ✔

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Compute Liquidity and Solvency Ratios for Competing Firms
Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.
$ millions
Cash and equivalents
Short-term investments
Accounts receivable
Current assets
Current liabilities
Total liabilities
Total equity
Earnings before interest and tax (EBIT)
Interest expense, gross
a. Compute the following measures for both companies.
Note: Round your final answers to two decimal places (for example, enter 6.78 for 6.77555).
1. Current ratio
2. Quick ratio
3. Times interest earned
4. Liabilities-to-equity
HAL SLB
$2,008 $1,433
1,344
5,077 7,645
11,151 15,731
4,658 13,081
16,438 33,921
9,258 35,488
2,393 2,959
554
537
HAL
2.28 x
1.5 x
4.54 x
1.69 *
SLB
1.114 x
0.79 x
5.79 *
0.91 x
b. Which company appears more liquid? HAL
c. Which company appears more solvent? SLB =
Transcribed Image Text:Compute Liquidity and Solvency Ratios for Competing Firms Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements. $ millions Cash and equivalents Short-term investments Accounts receivable Current assets Current liabilities Total liabilities Total equity Earnings before interest and tax (EBIT) Interest expense, gross a. Compute the following measures for both companies. Note: Round your final answers to two decimal places (for example, enter 6.78 for 6.77555). 1. Current ratio 2. Quick ratio 3. Times interest earned 4. Liabilities-to-equity HAL SLB $2,008 $1,433 1,344 5,077 7,645 11,151 15,731 4,658 13,081 16,438 33,921 9,258 35,488 2,393 2,959 554 537 HAL 2.28 x 1.5 x 4.54 x 1.69 * SLB 1.114 x 0.79 x 5.79 * 0.91 x b. Which company appears more liquid? HAL c. Which company appears more solvent? SLB =
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