Compute and interpret Liquidity, Solvency and Coverage Ratios Balance sheets and income statements for Lockheed Martin...

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Compute and interpret Liquidity, Solvency and Coverage Ratios Balance sheets and income statements for Lockheed Martin Corporation follow. Refer to these financial statements to answer the requirements. Income Statement Year Ended December 31 (In millions) 2005 2004 2003 Net sales Products $31,518 $30,202 $ 27,290 Service 5,695 5,324 4534 37,213 35,526 31,824 Cost of sales Products 27,882 27,637 25,306 Service 5,073 4,765 4,099 Unallocated coporate costs 803 914 443 33,758 33,316 29,848 3,455 2,210 1,976 Other income expenses, net (449) (121) Operating profit 3,006 2,089 2,019 Interest expense 370 425 487 Earnings before taxes 2,636 1,664 1,532 Income tax expense 398 Net earnings $ 1,825 $1,266 $1,053 Balance Sheet December 31 (In millions) 2005 2004 Assets Cash and cash equivalents $ 2,164 $780 Short-term investments 429 Receivables 4,579 4,094 Inventories 1,921 Deferred income taxes 479 Other current assets Total current assets Property, plant and equipment, net Investments in equity securities Goodwill Purchased intangibles, net Prepaid pension asset Other assets Total assets Liabilities and stockholders equity 10,449 8,675 3,924 3,599 196 8,447 7,892 560 1,360 1,030 2,728 2.596 $ 27,664 525,274 $1,726 Accounts payable $ 1,998 4.331 Customer advances and amounts in excess of costs incurred 1.422 4,664 1.236 E BUSTITESCU autes and Stockholders equity $ 1,998 $1,726 Accounts payable 4,331 4,028 Customer advances and amounts in excess of costs incurred 1,4751,346 Salaries, benefits and payroll taxes 202 Current maturities of long-term debt 1,451 Other current liabilities 9,428 8,566 Total current liabilities 5.264 Long-term debt 2,097 Accrued pension liabilities 1,277 Other postretirement benefit liabilities Other liabilities 2,331 Stockholders' equity Common stock, $1 par value per share 432 438 Additional paid-in capital 1,724 2.223 Retained earnings 7,278 5.915 Accumulated other comprehensive loss (1,553) (1,532) Other (14) (23) Total stockholders' equity 7,867 7,021 Total liabilities and stockholders' equity $ 27,664 $ 25,274 Consolidated Statement of Cash Flows Year Ended December 31 (In millions) Operating Activities Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization Amortization of purchased intangibles Deferred federal income taxes Changes in operating assets and liabilities: Receivables 2005 2004 2003 $ 1,825 $ 1,266 $1,053 555 150 24 511 145 (58) 480 129 467 (390) (39) (258) (94) 330 239 296 534 3,194 (87) 519 288 (228) 568 2,924 (285) (13) 1,809 Inventories Accounts payable Customer advances and amounts in excess of costs incurred Other Net cash provided by operating activities Investing Activities Expenditures for property, plant and equipment Acquisition of business/investments in affiliated companies Proceeds from divestiture of businesses/Investments in affiliated companies Purchase of short-term investments, net Other Net cash used for investing activities (865) (84) 935 (33) 28 (19) (769) (687) (91) (821) 279 234 (156) (240) 29 (708) (1,461) 53 534 Business Course 51,825 5 1,266 5 1,053 Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities 555 511 480 Depreciation and amortization 150 145 129 Amortization of purchased intangibles 24 (58) 467 Deferred federal income taxes Changes in operating assets and liabilities: (390) (87) (258) Receivables (39) 519 (94) Inventories 239 288330 Accounts payable 296 (228) (285) Customer advances and amounts in excess of costs incurred 568 Other (13) 3,194 2,924 1,809 Net cash provided by operating activities Investing Activities Expenditures for property, plant and equipment (865) (769) (687) (84) Acquisition of business/investments in affiliated companies (91) (821) Proceeds from divestiture of businesses/Investments in affiliated companies 935 279 234 (33) Purchase of short-term investments, net (156) (240) Other 29 53 Net cash used for investing activities (19) (708) (1.461) Financing Activities repayment of long-term debt (413) (1,369) 12,202) - 1,000 Issuances of long-term debt Long term debt repayment and issuance costs (12) (163) (175) 406 164 Issuances of common stock Repurchases of common stock (1,310) (673) (482) (462) (405) Common stock dividends (261) Net cash used for financing activities (1.791) (2,446) (2,076) Net increase (decrease in cash and cash equivalents 1,384 (230) (1,728) Cash and cash equivalents at beginning of year 780 1,010 2,738 Cash and cash equivalents at end of year 52,164 $780 $1,010 (a) Compute Lockheed Martin's current ratio and quick ratio for 2005 and 2004. (Round your answers to two decimal places.) 2005 current ratio = 0 2004 current ratio = 0 2005 quick ratio = 0 2004 quick ratio - 0 (b) Compute total liabilities-to-equity ratios and total debt-to-equity ratios for 2005 and 2004. (Round your answers to two decimal places.) 2005 total liabilities-to-stockholders' equity = 0 2004 total liabilities-to-stockholders' equity=0 X 2005 total debt-to-equity = 0 x 2004 total debt-to-equity = 0 (c) Compute times interest earned ratio, cash from operations to total debt ratio, and free operating cash flow to total debt ratios. (Round your answers to two decimal places.) 2005 times interest earned = 0 2004 times interest earned 0 2005 cash from operations to total debt - 0 2004 cash from operations to total debt 0 2005 free operating cash flow to total debt = 0 2004 free operating cash flow to total debt - 0

 · Answer

Answer:     2005 Current Ratio =                                                    1.11    2004 Current Ratio =                                                    1.01          2005 Quick Ratio =                                                    0.90    2004 Quick Ratio =                                                    0.79          2005 Total Debt to Equity                                                    1.32    2004 Total Debt to Equity                                                    1.38          2005 times interest earned                                                    8.12    2004 times interest earned                                                    4.92          2005 Cash flow from operation to total debt                                                    0.31    2004 Cash flow from operation to total debt                                                    0.30          2005 Free Operating Cash flow to total debt                                                    0.22    2004 Free Operating Cash flow to total debt                                                    0.22        Working Notes              2005  2004    Current Ratio = Current Assets / Current Liabilities        Current Assets:  Cash and Cash equivalents               2,164.00                      780.00      Short term investment                   429.00                      396.00      Receivables               4,579.00                  4,094.00      Inventories               1,921.00                  1,864.00      Deferred Income Taxes                   861.00                      982.00      Other current assets                   495.00                      557.00      Total Current Assets             10,449.00                  8,673.00      Current Liabilities               9,428.00                  8,566.00      Current Ratio =                       1.11                          1.01    Quick Ratio = (Current Asset - Inventories) / (Current Liabilities-Bank OD)            Current Assets             10,449.00                  8,673.00      Inventories               1,921.00                  1,864.00      Current Assets - Inventories               8,528.00                  6,809.00      Current Liabilities               9,428.00                  8,566.00      Quick Ratio =                       0.90                          0.79    Total Debt to Equity = Debt / Equity            Long term debt               4,664.00                  5,264.00      Accrued pension liabilities               2,097.00                  1,300.00     Other post retirement benefits liabilities               1,277.00                  1,236.00      Other liabilities               2,331.00                  1,887.00      Total Debt             10,369.00                  9,687.00      Total Stock holders equity               7,867.00                  7,021.00      Total Debt to Equity =                       1.32                          1.38    Time interest earned =  EBIT / Interest expenses          EBIT ( Operating Profit )               3,006.00                  2,089.00      Interest Expenses                   370.00                      425.00      Time interest earned =                       8.12                          4.92    Cash from operations to total debt            Cash from operation               3,194.00                  2,924.00      Long term debt               4,664.00                  5,264.00      Accrued pension liabilities               2,097.00                  1,300.00     Other post retirement benefits liabilities               1,277.00                  1,236.00      Other liabilities               2,331.00                  1,887.00      Total Debt             10,369.00                  9,687.00      Cash from operations to total debt                       0.31                          0.30    Free Operating cash flows to total debt            Free operating cash flow = Operating cashflow - Capex      Operating Cash flow               3,194.00                  2,924.00      Capex          Expenditure for property, plant and equipment                   865.00                      769.00      Free Operating cash flow=               2,329.00                  2,155.00      Long term debt               4,664.00                  5,264.00      Accrued pension liabilities               2,097.00                  1,300.00     Other post retirement benefits liabilities               1,277.00                  1,236.00      Other liabilities               2,331.00                  1,887.00      Total Debt             10,369.00                  9,687.00      Free Operating cash flows to total debt                       0.22                          0.22   .

Compute and interpret Liquidity, Solvency and Coverage Ratios Balance sheets and income statements for Lockheed Martin...

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2005 Current Ratio =	1.11
2004 Current Ratio =	1.01

2005 Quick Ratio =	0.90
2004 Quick Ratio =	0.79

2005 Total Debt to Equity	1.32
2004 Total Debt to Equity	1.38

2005 times interest earned	8.12
2004 times interest earned	4.92

2005 Cash flow from operation to total debt	0.31
2004 Cash flow from operation to total debt	0.30

2005 Free Operating Cash flow to total debt	0.22
2004 Free Operating Cash flow to total debt	0.22

Working Notes
		2005	2004
Current Ratio = Current Assets / Current Liabilities
Current Assets:	Cash and Cash equivalents	2,164.00	780.00
	Short term investment	429.00	396.00
	Receivables	4,579.00	4,094.00
	Inventories	1,921.00	1,864.00
	Deferred Income Taxes	861.00	982.00
	Other current assets	495.00	557.00
	Total Current Assets	10,449.00	8,673.00
	Current Liabilities	9,428.00	8,566.00
	Current Ratio =	1.11	1.01
Quick Ratio = (Current Asset - Inventories) / (Current Liabilities-Bank OD)
	Current Assets	10,449.00	8,673.00
	Inventories	1,921.00	1,864.00
	Current Assets - Inventories	8,528.00	6,809.00
	Current Liabilities	9,428.00	8,566.00
	Quick Ratio =	0.90	0.79
Total Debt to Equity = Debt / Equity
	Long term debt	4,664.00	5,264.00
	Accrued pension liabilities	2,097.00	1,300.00
	Other post retirement benefits liabilities	1,277.00	1,236.00
	Other liabilities	2,331.00	1,887.00
	Total Debt	10,369.00	9,687.00
	Total Stock holders equity	7,867.00	7,021.00
	Total Debt to Equity =	1.32	1.38
Time interest earned =	EBIT / Interest expenses
	EBIT ( Operating Profit )	3,006.00	2,089.00
	Interest Expenses	370.00	425.00
	Time interest earned =	8.12	4.92
Cash from operations to total debt
	Cash from operation	3,194.00	2,924.00
	Long term debt	4,664.00	5,264.00
	Accrued pension liabilities	2,097.00	1,300.00
	Other post retirement benefits liabilities	1,277.00	1,236.00
	Other liabilities	2,331.00	1,887.00
	Total Debt	10,369.00	9,687.00
	Cash from operations to total debt	0.31	0.30
Free Operating cash flows to total debt
	Free operating cash flow = Operating cashflow - Capex
	Operating Cash flow	3,194.00	2,924.00
	Capex
	Expenditure for property, plant and equipment	865.00	769.00
	Free Operating cash flow=	2,329.00	2,155.00
	Long term debt	4,664.00	5,264.00
	Accrued pension liabilities	2,097.00	1,300.00
	Other post retirement benefits liabilities	1,277.00	1,236.00
	Other liabilities	2,331.00	1,887.00
	Total Debt	10,369.00	9,687.00
	Free Operating cash flows to total debt	0.22	0.22