What challenges, strengths, or weaknesses do you see Baxter International Inc. would have in 2016 with a liquidity ratio of 2.4 and a profitability ratio of 0.31. In 2017 the company liquidity ratio was 2.6 and their profitability ratio was 0.41. Please be articulate in your rationale for both years and no hand written answers. What challenges, strengths, or weaknesses do you see Exxon Mobil Corp. would have in 2016 with a liquidity ratio of 0.9 and a profitability ratio of 0.02. In 2017 the company liquidity ratio was 0.8 and their profitability ratio was 0.05. Please be articulate in your rationale for both years and no hand written answers. Solution Answer) The liquidity ratio study the firm\'s short term solvency and its ability to pay off the current liabilities. This ratio provides the information about the firms liquidity and the primary concern is the firm’s ability to pay its current liabilities. Liquidity Ratio (2016) - The Baxter International Inc.\'s liquidity ratio is 2.4 means more than 2 which denotes good liquidity position as the firm has sufficient cash to meet current obligations and the greater safety of funds of the short-term creditors. It is the strength for the firm as the firm is in strong financial position which represents margin of safety for current liabilities. Profitability Ratio (2016): Profitability means the ability of a company to earn a profit. Firm’s profitability is very important both for stockholders and creditors because revenue in the form of dividends is being derived from profits, as well as profits are one source of funds for covering debts. Profitability ratio analysis is a good way to measure Company’s performance. The Baxter International Inc.\'s profitability ratio is 0.31 0r 30% it is a good indicator for the firm. Generally, 20% to 30% gross profit margin is considered to be adequate for a business concern to meet its fixed obligations, dividend and all other appropriations. Liquidity Ratio (2017) - The Baxter International Inc.\'s liquidity ratio is 2.6 means more than 2 which denotes good liquidity position as the firm has sufficient cash to meet current obligations and the greater safety of funds of the short-term creditors..It is the strength for the firm as the firm is in strong financial position which represents margin of safety for current liabilities. Profitability Ratio (2017) : The Baxter International Inc.\'s profitability ratio is 0.41 0r 40% it is a good indicator for the firm. It has increased as compared to last which indicates the company is earning good profit. Liquidity Ratio (2016) - The Exxon Mobil Corp. \'s liquidity ratio is 0.9 means less than 1 which denotes poor liquidity position as the firm doesn\'t have sufficient cash to meet current obligations. It shows the weakness of company as the company isn\'t doing very well--they can\'t pay back all the money they owe with the cash they have on hand and will have to start selling long-term assets, or look at refinancing .