Use Limited Brands, Inc.'s financial statements available on the Web at www.mhhe.com/higgins9e to answer the questions below. (Select Student Edition > Choose a Chapter > Excel Spreadsheets.) Use the company's Operating Profit as an approximation of its EBIT, and you may assume a 40 percent tax rate for your calculations.

a. For the fiscal years ending in January of 2006 and 2007, calculate 1 Limited Brands' total liabilities-to-equity ratio; 2 Times interest earned ratio; and 3 Times burden covered.

b. What percentage decline in earnings before interest and taxes could Limited Brands have sustained in Fiscal Years 2006 and 2007 before failing to cover 1 Interest and principal repayment requirements, 2 Interest, principal and common dividend payments?

c. Prepare common-size financial statements for Limited Brands, Inc. for 2006-2007.

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