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 4,534 37,213 35,526 31,824 Cost of sales Products 27,932 27,637 25,306 Service 5,073 4,765 4,099 Unallocated coporate costs 33,808 33,316 29,848 3,405 2,210 1,976 Other income (expenses), net (449) (121) Operating profit 2,956 2,089 2,019 803 914 443 43 Intarart 42 A07 Other income (expenses), net (449) (121) 43 Operating profit 2,956 2,089 2,019 Interest expense 370 425 487 Earnings before taxes 2,586 1,664 1,532 Income tax expense 761 368 479 Net earnings $ 1,825 $1,296 $ 1,053 Balance Sheet December 31 (In millions) 2005 2004 Assets Cash and cash equivalents $ 2,124 $1,080 Short-term investments 429 396 Receivables 4,579 4,094 Inventories 1,921 1,864 Deferred income taxes 861 982 Other current assets 495 557 Total current assets 10,409 8,973 Other current assets 495 557 Total current assets 10,409 8,973 Property, plant and equipment, net 3,924 3,599 Investments in equity securities 196 812 Goodwill 8,447 7,892 Purchased intangibles, net 560 672 Prepaid pension asset 1,360 1,030 Other assets 2,728 2,596 Total assets $ 27,624 $25,574 Liabilities and stockholders' equity Accounts payable $ 1,998 $ 1.726 Customer advances and amounts in excess of costs incurred 4,331 4,028 Salaries, benefits and payroll taxes 1,475 1,346 Current maturities of long-term debt 202 15 Other current liabilities 1,422 1,451 Total current liabilities 9,428 8,566 Other current liabilities 1,422 1,451 Total current liabilities 9,428 8,566 Long-term debt 4,944 5,184 Accrued pension liabilities 1,617 1,760 Other postretirement benefit liabilities 1,277 1,236 Other liabilities 2,491 1,807 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) (14) (23) Total stockholders' equity 7,867 7,021 Total liabilities and stockholders' equity $ 27,624 $ 25,574 Consolidated Statement of Cash Flows Year Ended December 31 (In millions) Other 2005 2004 2003 Other (14) (23) Total stockholders' equity 7,867 7,021 Total liabilities and stockholders' equity $ 27,624 $ 25,574 Consolidated Statement of Cash Flows Year Ended December 31 (In millions) 2005 2004 2003 Operating Activities Net earnings $ 1,825 $1,266 $1,053 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 555 511 480 Amortization of purchased intangibles 145 129 Deferred federal income taxes (58) 467 Changes in operating assets and liabilities: Receivables (390) (87) (258) Inventories (39) 519 Accounts payable 239 288 Customer advances and amounts in excess of costs incurred (228) (28 150 24 (941 296 Accounts payable Customer advances and amounts in excess of costs incurred Other 239 288 330 296 (228) (285) 534 568 (13) 3,194 2,924 1,809 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 Financing Activities repayment of long-term debt Issuances of long-term debt Long-term debt repayment and issuance costs Issuances of common stock (865) (769) (687) (784) (91) (821) 935 279 234 (33) (240) 28 29 53 (719) (708) (1,461) (156) (53) (1,069) (2,202) 1,000 (12) (163) 406 164 ** AAN 15 Suances or omstereo Long-term debt repayment and issuance costs Issuances of common stock Repurchases of common stock Common stock dividends Net cash used for financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (12) (163) (175) 406 164 44 (1,310) (673) (482) (462) (405) (261) (1,431) (2,146) (2,076) 1,044 70 (1,728) 1,080 1,010 2,738 $ 2,124 $1,080 $ 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 = 1.1 2004 current ratio = 1.05 Article (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 = 2.51 2004 total liabilities-to-stockholders' equity = 2.64 2005 total debt-to-equity = 0.63 2004 total debt-to-equity = 0.74 Which of the following best describes the company's total liabilities-to-equity ratios and total debt-to-equity ratios for 2005 and 2004? OThe total liabilities-to-equity ratio has decreased while the total debt-to-equity ratio has increased in the period from 2004 to 2005, which suggests the company has decreased t use of short-term debt financing. The total liabilitierte unitati bae (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 = 7.99 2004 times interest earned = 4.92 2005 cash from operations to total debt = 0.22 2004 cash from operations to total debt = 0.01 X 2005 free operating cash flow to total debt = 6.58 X 2004 free operating cash flow to total debt = 5.7 x