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

Question:

Compute and interpret Liquidity, Solvency and Coverage Ratios Balance sheets and income statements for Lockheed Martin Corpor
1.422 4,664 1.236 E BUSTITESCU autes and Stockholders equity $ 1,998 $1,726 Accounts payable 4,331 4,028 Customer advances an
534 Business Course 51,825 5 1,266 5 1,053 Net earnings Adjustments to reconcile net earnings to net cash provided by operati
(b) Compute total liabilities-to-equity ratios and total debt-to-equity ratios for 2005 and 2004. (Round your answers to two
(c) Compute times interest earned ratio, cash from operations to total debt ratio, and free operating cash flow to total debt
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

Answers

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
.

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