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 5 30,202 $ 27.290 Service 5.695 5.324 4534 37,213 35 526 31.824 Cost of sales Products 27882 27.637 25.306 Service 5073 4765 Un located coporate costs 803 443 33.258 33316 2984 3455 2210 1970 Other income expenses 14493 1121) Operating pro 3.000 2009 3.019 Interestepense 370 425 UT Earnings before 2,636 1.664 1.53 Income tax pense 39 4) Netamine $ 1.325 12662053 Balance Sheet December 310 milliona) 2005 2004 4.099 Balance Sheet December 31 (In millions) 2005 2004 Assets $ 2,164 429 Cash and cash equivalents Short-term investments Receivables Inventories $ 780 396 4,579 1,921 4,094 1,864 982 861 495 10,449 3,924 557 8,673 3,599 812 196 Deferred income taxes 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 Accounts payable Customer advances and amounts in excess of costs incurred Salaries, benefits and payroll taxes Current maturities of long-term debt Other current liabilities Total current liabilities 8,447 7,892 560 672 1,360 1,030 2,728 2,596 $ 27,664 $ 25,274 $ 1,726 4,028 1,346 $ 1,998 4,331 1,475 202 1,422 9,428 15 1,451 8,566 Total current liabilities 9,428 8,566 Long-term debt 4,664 5,264 Accrued pension liabilities 2,097 1,300 Other postretirement benefit liabilities 1,277 1,236 Other liabilities 2,331 1,887 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) 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 150 145 129 Deferred federal income taxes 24 (58) 467 Changes in operating assets and liabilities: Receivables (390) (87) (258) Inventories (39) 519 (94) Accounts payable 239 288 22 (39) 239 519 288 296 (94) 330 (285) (13) 1,809 (228) 568 2,924 534 3,194 (865) (84) 935 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 Financing Activities repayment of long-term debt Issuances of long-term debt 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 (769) (687) (91) (821) 279 234 (156) (240) 29 53 (708) (1,461) (33) 28 (19) (413) (1,369) (2,202) 1,000 (12) (163) (175) 406 164 44 (1.310) (673) (482) (462) (405) (261) 1.791) (2.446) 2,076) 1,384 (230) 1.728) 780 1,010 2.738 $ 2,164 $ 780 $ 1.010 (a) Compute Lockheed Martin's current ratio and quick ratio for 2005 and 2004 Rindu (b) Compute total liabilities-to-equity ratios and total de 2005 total liabilities-to-stockholders' equity = 2.51 = 2004 total liabilities-to-stockholders' equity = 2.6 = 2005 total debt-to-equity = 0.59 X 2004 total debt-to-equity = 0.75 Which of the following best describes the company's tot The total liabilities-to-equity ratio has decreased while the use of short-term debt financing. The total liabilities-to-equity ratio has increased while the use of short-term debt financing. Both the total liabilities-to-equity and total debt-to-equ Both the total liabilities-to-equity and total debt-to-equ concerns would be for the short run. (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 3.1 2004 times interest earned - 484 2005 cash from operations to total debt = 0.64 2004 cash from operations to total debt - 0.56 x 2005 free operating cash flow to total debt" 0.47 2004 free operating cash flow to total debt 0.56 Which of the following describes the company's times interest earried cash from operations to total debt and free operating cash flow to total debt ratios for 2005 and 2004 Select all that apply Lockheed Martin's free operating cash row to total debt ratio increased slightly over the year 2005 due to increased cash flow from operations and decreased levels of debt Lockheed Martins cash from operations to total debt ratio increased slightly over the year 2005 due to increased cash flow from operations and decreased in