(9 points) Obtain Goodyear's annual report for 2019 and 2018 (Consolidated Balance sheet starts pg. 34(2019)/pg. 38(2018), Consolidated Statement of Operations/Income starts pg. 32(2019)/pg. 36(2018). Calculate the current ratio, acid-test ratio, net profit ratio, interest coverage ratio and return on equity (ROE) for the company in 2019, 2018 and 2017 (when you have the data). From the values of these ratios, discuss if the company was in a better financial position following 2019 as compared to 2018 and 2017. Explain why or why not using your calculations. Are any of the ratios that concern you and why/why not? (2019, 2018 annual reports of Goodyear are provided) THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In millions, except per share amounus) 2018 2017 2016 Net Sales (Note 2) $15,475 $15,377 $15,158 Cost of Goods Sold 11,961 11,680 10,935 Selling, Administrative and General Expense 2,312 2.279 2,409 Rationalizations (Note 3) 44 135 210 Interest Expense (Note 4) 321 335 372 Other (Income) Expense (Note 5) (174) 70 25 Income before Income Taxes 1,011 878 1,207 United States and Foreign Tax Expense (Benefit) (Note 6) 303 513 (77) Net Income 708 365 1,284 Less: Minority Shareholders' Net Income 15 19 20 Goodyear Net Income 693 $ 346 $ 1,264 Goodyear Net Income --- Per Share of Common Stock Basic... $ 2.92 $ 1.39 $ 4.81 Weighted Average Shares Outstanding (Note 7) 237 249 263 Diluted $ 2.89 $ 1.37 $ 4.74 Weighted Average Shares Outstanding (Note 7) 239 253 Cash Dividends Declared Per Common Share $ 0.58 $ 0.44 $ 0.31 The accompanying notes are an integral part of these consolidated financial statements. $ 266 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (In millions) 2019 2018 2017 Net Income (Loss) $ (297) $ 708 $ 365 Other Comprehensive Income (Loss): Foreign currency translation, net of tax of $4 in 2019 (($10) in 2018, $39 in 2017) 5 (264) 257 Defined benefit plans: Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $33 in 2019 ($34 in 2018, $40 in 2017). 104 105 77 (Increase/decrease in net actuarial losses, net of tax of ($42) in 2019 ($1 in 2018, ($37) in 2017) (169) 16 (100) Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures, net of tax of $2 in 2019 ($5 in 2018, $14 in 2017)..... 4 20 27 Prior service credit (cost) from plan amendments, net of tax of $1 in 2019 ($3) in 2018, ($2) in 2017)...... 1 (12) Deferred derivative gains (losses), net of tax of $0 in 2019 ($3 in 2018, ($8) in 2017)...... 10 (20) Reclassification adjustment for amounts recognized in income, net of tax of $0 in 2019 ($0 in 2018, $1 in 2017).. (14) 7 1 Other Comprehensive Income (Loss). (59) (119) 238 Comprehensive Income (Loss) (356) 589 603 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders 15 35 Goodyear Comprehensive Income (Loss) (371) $ 593 $ 568 The accompanying notes are an integral part of these consolidated financial statements. 9 2018 2017 2016 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (in millions) Net Income $ 708 $ 365 $1,284 Other Comprehensive Income (Loss): Foreign currency translation net of tax of ($10) in 2018 ($39 in 2017, ($2) in 2016) (264) 257 (221) Defined benefit plans: Amortization of prior service cost and unrecognized gains and losses included in total benefit cost net of tax of $34 in 2018 (540 in 2017, $33 in 2016) 105 77 63 Decrease (increase) in net actuarial losses net of tax of $1 in 2018 (($37) in 2017, ($53) in 2016) ..... 16 (100) (62) Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures net of tax of $5 in 2018 ($14 in 2017, $0 in 2016).... 20 27 17 Prior service (cost) credit from plan amendments net of tax of ($3) in 2018 ((52) in 2017. $0 in 2016)...... (12) Deferred derivative gains (losses) net of tax of $3 in 2018 (($8) in 2017, $4 in 2016)...... (20) Reclassification adjustment for amounts recognized in income net of tax $0 in 2018 ($1 in 2017, ($1) in 2016).... 1 Other Comprehensive Income (Loss) (119) 238 (200) Comprehensive Income .. 589 603 1,084 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders 35 8 Goodyear Comprehensive Income $ 593 $ 568 $1,076 The accompanying notes are an integral part of these consolidated financial statements. 9 8 7 2019 2018 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (In millions, except share data) Assets: Current Assets: Cash and Cash Equivalents (Note 1) 908 $ 801 Accounts Receivable (Note 9) 1,941 2,030 Inventories (Note 10)... 2,851 2,856 Prepaid Expenses and Other Current Assets 234 238 Total Current Assets 5,934 5,925 Goodwill (Note 11) 565 569 Intangible Assets (Note 11) 137 136 Deferred Income Taxes (Note 6) 1,527 1,847 Other Assets (Note 12) 959 1,136 Operating Lease Right-of-Use Assets (Note 14) 855 Property, Plant and Equipment (Note 13) 7,208 7,259 Total Assets .. $ 17,185 $ 16,872 Liabilities: Current Liabilities: Accounts Payable Trade $ 2,908 $ 2,920 Compensation and Benefits (Notes 17 and 18) 536 471 Other Current Liabilities 734 737 Notes Payable and Overdrafts (Note 15) 348 410 Operating Lease Liabilities due Within One Year (Note 14) 199 Long Term Debt and Finance Leases due Within One Year (Notes 14 and 15). 562 243 Total Current Liabilities 5,287 4,781 Operating Lease Liabilities (Note 14) 668 Long Term Debt and Finance Leases (Notes 14 and 15) 4,753 5,110 Compensation and Benefits (Notes 17 and 18) 1,334 1,345 Deferred Income Taxes (Note 6) 90 95 Other Long Term Liabilities 508 471 Total Liabilities 12,640 11,802 Commitments and Contingent Liabilities (Note 19) Shareholders' Equity: Goodyear Shareholders' Equity: Common Stock, no par value: Authorized, 450 million shares, Outstanding shares 233 million (232 million in 2018) 233 232 Capital Surplus 2,141 2,111 Retained Earnings 6,113 6,597 Accumulated Other Comprehensive Loss (Note 21) (4.136) (4,076) Goodyear Shareholders' Equity 4,351 4,864 Minority Shareholders' Equity Nonredeemable 194 206 Total Shareholders' Equity.... 4,545 5,070 Total Liabilities and Shareholders' Equity $ 17,185 $ 16,872 The accompanying notes are an integral part of these consolidated financial statements. THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2018 2017 $ 801 $ 1,043 2,030 2,025 2,856 2,787 238 224 5,925 6,079 569 595 136 139 1,847 2,008 1,136 792 7,259 7,451 $16,872 $17,064 (In millions, except share data) Assets Current Assets: Cash and Cash Equivalents (Note 1) Accounts Receivable (Note 9). Inventories (Note 10) Prepaid Expenses and Other Current Assets Total Current Assets Goodwill (Note 11) Intangible Assets (Note 11). Deferred Income Taxes (Note 6). Other Assets (Note 12) Property, Plant and Equipment (Note 13) Total Assets Liabilities Current Liabilities: Accounts Payable-Trade Compensation and Benefits (Notes 17 and 18) Other Current Liabilities Notes Payable and Overdrafts (Note 15). Long Term Debt and Capital Leases due Within One Year (Note 15) Total Current Liabilities .. Long Term Debt and Capital Leases (Note 15) Compensation and Benefits (Notes 17 and 18) Deferred Income Taxes (Note 6). Other Long Term Liabilities Total Liabilities Commitments and Contingent Liabilities (Note 19) Shareholders' Equity Goodyear Shareholders' Equity Common Stock, no par value: Authorized, 450 million shares, Outstanding shares 232 million (240 million in 2017) Capital Surplus Retained Earnings Accumulated Other Comprehensive Loss (Note 21) Goodyear Shareholders' Equity Minority Shareholders' Equity - Nonredeemable Total Shareholders' Equity Total Liabilities and Shareholders' Equity The accompanying notes are an integral part of these consolidated financial statements. $ 2,920 $ 2,807 471 539 737 1,026 410 262 243 391 4,781 5,025 5,110 5,076 1,345 1,515 95 100 471 498 11,802 12,214 232 240 2,111 2,295 6,597 6,044 (4,076) (3,976) 4,864 4,603 206 247 5,070 4,850 $16,872 $17,064 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In millions, except per share amounts) 2019 2018 2017 Net Sales (Note 2) $ 14,745 $ 15,475 $ 15,377 Cost of Goods Sold 11,602 11,961 11,680 Selling, Administrative and General Expense 2,323 2,312 2,279 Rationalizations (Note 3).. 205 44 135 Interest Expense (Note 4) 340 321 335 Other (Income) Expense (Note 5) 98 (174) 70 Income before Income Taxes 177 1,011 878 United States and Foreign Tax Expense (Note 6) 474 303 513 Net Income (Loss).. (297) 708 365 Less: Minority Shareholders' Net Income 14 15 19 Goodyear Net Income (Loss) (311) $ 693 $ 346 Goodyear Net Income (Loss) Per Share of Common Stock Basic (1.33) 2.92 1.39 Weighted Average Shares Outstanding (Note 7) 233 237 249 Diluted .. (1.33) $ 2.89 Weighted Average Shares Outstanding (Note 7) 233 239 253 The accompanying notes are an integral part of these consolidated financial statements. 1.37 (9 points) Obtain Goodyear's annual report for 2019 and 2018 (Consolidated Balance sheet starts pg. 34(2019)/pg. 38(2018), Consolidated Statement of Operations/Income starts pg. 32(2019)/pg. 36(2018). Calculate the current ratio, acid-test ratio, net profit ratio, interest coverage ratio and return on equity (ROE) for the company in 2019, 2018 and 2017 (when you have the data). From the values of these ratios, discuss if the company was in a better financial position following 2019 as compared to 2018 and 2017. Explain why or why not using your calculations. Are any of the ratios that concern you and why/why not? (2019, 2018 annual reports of Goodyear are provided) THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In millions, except per share amounus) 2018 2017 2016 Net Sales (Note 2) $15,475 $15,377 $15,158 Cost of Goods Sold 11,961 11,680 10,935 Selling, Administrative and General Expense 2,312 2.279 2,409 Rationalizations (Note 3) 44 135 210 Interest Expense (Note 4) 321 335 372 Other (Income) Expense (Note 5) (174) 70 25 Income before Income Taxes 1,011 878 1,207 United States and Foreign Tax Expense (Benefit) (Note 6) 303 513 (77) Net Income 708 365 1,284 Less: Minority Shareholders' Net Income 15 19 20 Goodyear Net Income 693 $ 346 $ 1,264 Goodyear Net Income --- Per Share of Common Stock Basic... $ 2.92 $ 1.39 $ 4.81 Weighted Average Shares Outstanding (Note 7) 237 249 263 Diluted $ 2.89 $ 1.37 $ 4.74 Weighted Average Shares Outstanding (Note 7) 239 253 Cash Dividends Declared Per Common Share $ 0.58 $ 0.44 $ 0.31 The accompanying notes are an integral part of these consolidated financial statements. $ 266 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (In millions) 2019 2018 2017 Net Income (Loss) $ (297) $ 708 $ 365 Other Comprehensive Income (Loss): Foreign currency translation, net of tax of $4 in 2019 (($10) in 2018, $39 in 2017) 5 (264) 257 Defined benefit plans: Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $33 in 2019 ($34 in 2018, $40 in 2017). 104 105 77 (Increase/decrease in net actuarial losses, net of tax of ($42) in 2019 ($1 in 2018, ($37) in 2017) (169) 16 (100) Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures, net of tax of $2 in 2019 ($5 in 2018, $14 in 2017)..... 4 20 27 Prior service credit (cost) from plan amendments, net of tax of $1 in 2019 ($3) in 2018, ($2) in 2017)...... 1 (12) Deferred derivative gains (losses), net of tax of $0 in 2019 ($3 in 2018, ($8) in 2017)...... 10 (20) Reclassification adjustment for amounts recognized in income, net of tax of $0 in 2019 ($0 in 2018, $1 in 2017).. (14) 7 1 Other Comprehensive Income (Loss). (59) (119) 238 Comprehensive Income (Loss) (356) 589 603 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders 15 35 Goodyear Comprehensive Income (Loss) (371) $ 593 $ 568 The accompanying notes are an integral part of these consolidated financial statements. 9 2018 2017 2016 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (in millions) Net Income $ 708 $ 365 $1,284 Other Comprehensive Income (Loss): Foreign currency translation net of tax of ($10) in 2018 ($39 in 2017, ($2) in 2016) (264) 257 (221) Defined benefit plans: Amortization of prior service cost and unrecognized gains and losses included in total benefit cost net of tax of $34 in 2018 (540 in 2017, $33 in 2016) 105 77 63 Decrease (increase) in net actuarial losses net of tax of $1 in 2018 (($37) in 2017, ($53) in 2016) ..... 16 (100) (62) Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures net of tax of $5 in 2018 ($14 in 2017, $0 in 2016).... 20 27 17 Prior service (cost) credit from plan amendments net of tax of ($3) in 2018 ((52) in 2017. $0 in 2016)...... (12) Deferred derivative gains (losses) net of tax of $3 in 2018 (($8) in 2017, $4 in 2016)...... (20) Reclassification adjustment for amounts recognized in income net of tax $0 in 2018 ($1 in 2017, ($1) in 2016).... 1 Other Comprehensive Income (Loss) (119) 238 (200) Comprehensive Income .. 589 603 1,084 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders 35 8 Goodyear Comprehensive Income $ 593 $ 568 $1,076 The accompanying notes are an integral part of these consolidated financial statements. 9 8 7 2019 2018 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (In millions, except share data) Assets: Current Assets: Cash and Cash Equivalents (Note 1) 908 $ 801 Accounts Receivable (Note 9) 1,941 2,030 Inventories (Note 10)... 2,851 2,856 Prepaid Expenses and Other Current Assets 234 238 Total Current Assets 5,934 5,925 Goodwill (Note 11) 565 569 Intangible Assets (Note 11) 137 136 Deferred Income Taxes (Note 6) 1,527 1,847 Other Assets (Note 12) 959 1,136 Operating Lease Right-of-Use Assets (Note 14) 855 Property, Plant and Equipment (Note 13) 7,208 7,259 Total Assets .. $ 17,185 $ 16,872 Liabilities: Current Liabilities: Accounts Payable Trade $ 2,908 $ 2,920 Compensation and Benefits (Notes 17 and 18) 536 471 Other Current Liabilities 734 737 Notes Payable and Overdrafts (Note 15) 348 410 Operating Lease Liabilities due Within One Year (Note 14) 199 Long Term Debt and Finance Leases due Within One Year (Notes 14 and 15). 562 243 Total Current Liabilities 5,287 4,781 Operating Lease Liabilities (Note 14) 668 Long Term Debt and Finance Leases (Notes 14 and 15) 4,753 5,110 Compensation and Benefits (Notes 17 and 18) 1,334 1,345 Deferred Income Taxes (Note 6) 90 95 Other Long Term Liabilities 508 471 Total Liabilities 12,640 11,802 Commitments and Contingent Liabilities (Note 19) Shareholders' Equity: Goodyear Shareholders' Equity: Common Stock, no par value: Authorized, 450 million shares, Outstanding shares 233 million (232 million in 2018) 233 232 Capital Surplus 2,141 2,111 Retained Earnings 6,113 6,597 Accumulated Other Comprehensive Loss (Note 21) (4.136) (4,076) Goodyear Shareholders' Equity 4,351 4,864 Minority Shareholders' Equity Nonredeemable 194 206 Total Shareholders' Equity.... 4,545 5,070 Total Liabilities and Shareholders' Equity $ 17,185 $ 16,872 The accompanying notes are an integral part of these consolidated financial statements. THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2018 2017 $ 801 $ 1,043 2,030 2,025 2,856 2,787 238 224 5,925 6,079 569 595 136 139 1,847 2,008 1,136 792 7,259 7,451 $16,872 $17,064 (In millions, except share data) Assets Current Assets: Cash and Cash Equivalents (Note 1) Accounts Receivable (Note 9). Inventories (Note 10) Prepaid Expenses and Other Current Assets Total Current Assets Goodwill (Note 11) Intangible Assets (Note 11). Deferred Income Taxes (Note 6). Other Assets (Note 12) Property, Plant and Equipment (Note 13) Total Assets Liabilities Current Liabilities: Accounts Payable-Trade Compensation and Benefits (Notes 17 and 18) Other Current Liabilities Notes Payable and Overdrafts (Note 15). Long Term Debt and Capital Leases due Within One Year (Note 15) Total Current Liabilities .. Long Term Debt and Capital Leases (Note 15) Compensation and Benefits (Notes 17 and 18) Deferred Income Taxes (Note 6). Other Long Term Liabilities Total Liabilities Commitments and Contingent Liabilities (Note 19) Shareholders' Equity Goodyear Shareholders' Equity Common Stock, no par value: Authorized, 450 million shares, Outstanding shares 232 million (240 million in 2017) Capital Surplus Retained Earnings Accumulated Other Comprehensive Loss (Note 21) Goodyear Shareholders' Equity Minority Shareholders' Equity - Nonredeemable Total Shareholders' Equity Total Liabilities and Shareholders' Equity The accompanying notes are an integral part of these consolidated financial statements. $ 2,920 $ 2,807 471 539 737 1,026 410 262 243 391 4,781 5,025 5,110 5,076 1,345 1,515 95 100 471 498 11,802 12,214 232 240 2,111 2,295 6,597 6,044 (4,076) (3,976) 4,864 4,603 206 247 5,070 4,850 $16,872 $17,064 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In millions, except per share amounts) 2019 2018 2017 Net Sales (Note 2) $ 14,745 $ 15,475 $ 15,377 Cost of Goods Sold 11,602 11,961 11,680 Selling, Administrative and General Expense 2,323 2,312 2,279 Rationalizations (Note 3).. 205 44 135 Interest Expense (Note 4) 340 321 335 Other (Income) Expense (Note 5) 98 (174) 70 Income before Income Taxes 177 1,011 878 United States and Foreign Tax Expense (Note 6) 474 303 513 Net Income (Loss).. (297) 708 365 Less: Minority Shareholders' Net Income 14 15 19 Goodyear Net Income (Loss) (311) $ 693 $ 346 Goodyear Net Income (Loss) Per Share of Common Stock Basic (1.33) 2.92 1.39 Weighted Average Shares Outstanding (Note 7) 233 237 249 Diluted .. (1.33) $ 2.89 Weighted Average Shares Outstanding (Note 7) 233 239 253 The accompanying notes are an integral part of these consolidated financial statements. 1.37
