Here is question Q1. thank you for all your help. I will send you another question in a few minutes. Please let me know if you can accurately answer it. thank you

Question 1 (30 points) a. For the years 2005 - 2009, calculate ABC's i. Total liabilities-to-equity ratio (3 points) ii. Times interest earned ratio (note: EBIT = Operating profit) (5 points) iii. Times burden covered ratio (note: Principal payments in year t equal "Long-term debt due in one year" in year t-1. The tax r b. What percentage decline in earnings before interest and taxes could ABC have sustained in these years before failing to cover i. Interest requirement? (5 points) ii. Interest and principal payments? (5 points) ii. Interest, principal and common dividend payments? (5 points) c. What do these calculations suggest about ABC's financial leverage during this period? (2 points) ANNUAL BALANCE SHEET ($ MILLIONS) Dec09 Dec08 Dec07 Dec06 Dec05 ASSETS Cash & Short-Term Investments Inventories Other Current Assets 3,279 9,308 6,386 5,966 6,153 6,027 6,068 5,655 5,613 16,933 15,612 9,563 8,105 7,940 1,016 1,096 2,391 2,887 2,499 ------------------ ------------------ ------------------ ------------------ Net Receivables 11,223 -------------- Total Current Assets 35,325 26,014 27,330 23,033 22,018 Gross Plant, Property & Equipment 21,579 21,042 20,180 19,310 19,692 Accumulated Depreciation 12,795 12,280 11,915 11,635 11,272 ------------------ ------------------ ------------------ ------------------ -------------- Net Plant, Property & Equipment 8,784 8,762 8,265 7,675 8,420 974 942 1,085 964 84 Other Investments 5,522 6,243 9,803 11,641 12,407 Intangibles 7,196 6,332 5,174 4,745 2,799 Investments at Equity Deferred Charges Other Assets - 5,536 7,379 - 13,251 3,786 1,129 ------------------ ------------------ ------------------ -----------------TOTAL ASSETS 4,302 - -------------- 62,103 53,829 59,036 51,844 60,108 757 610 812 1,431 1,239 7,096 5,871 5,714 5,643 5,124 LIABILITIES Long Term Debt Due In One Year Accounts Payable Taxes Payable 182 41 253 670 556 Accrued Expenses 12,822 6,169 6,637 6,106 6,590 Other Current Liabilities 12,076 18,284 18,172 15,901 14,729 ------------------ ------------------ ------------------ ------------------ -------------- Total Current Liabilities 32,933 30,975 31,588 29,751 28,238 Long Term Debt 12,217 6,952 7,455 8,157 9,538 Deferred Taxes - Minority Interest 97 Other Liabilities 14,728 - 9,799 - 2,067 9,197 9,206 ------------------ ------------------ ------------------ -----------------TOTAL LIABILITIES 17,196 1,190 -------------- 59,975 55,123 50,032 47,105 49,049 Common Stock 5,061 5,061 5,061 5,061 5,061 Capital Surplus 3,724 3,456 4,757 4,655 4,371 Retained Earnings 10,869 9,150 16,780 10,236 15,498 Less: Treasury Stock 17,526 18,961 17,594 15,213 13,871 ------------------ ------------------ ------------------ ------------------ -------------- EQUITY TOTAL EQUITY Common Shares Outstanding 4,739 11,059 ------------------ ------------------ ------------------ -----------------TOTAL LIABILITIES & EQUITY 2,128 (1,294) 9,004 -------------- 62,103 53,829 59,036 51,844 60,108 726.291 698.138 736.681 757.836 760.577 ANNUAL INCOME STATEMENT Dec09 Dec08 Dec07 Dec06 Dec05 Sales 70,281 62,909 68,387 63,530 56,845 Cost of Goods Sold 55,092 48,950 51,977 48,926 44,757 ------------------- ------------------ ------------------ ------------------ --------------- Gross Profit 13,959 16,410 14,604 12,088 9,870 6,852 7,381 7,428 6,433 ------------------- ------------------ ------------------ ------------------ Selling, General, & Administrative Exp. 15,189 --------------- Operating Income Before Deprec. 5,319 7,107 9,029 7,176 5,655 Depreciation,Depletion,&Amortization 1,273 1,179 1,130 1,158 1,092 ------------------- ------------------ ------------------ ------------------ --------------- Operating Profit 4,046 5,928 7,899 6,018 4,563 Interest Expense 604 524 608 657 713 Non-Operating Income/Expense 289 591 827 709 391 (876) 578 ------------------- ------------------ ------------------ ------------------ --------------- Special Items Pretax Income 5,995 8,118 5,194 4,819 396 1,341 2,060 988 257 ------------------- ------------------ ------------------ ------------------ Total Income Taxes 3,731 --------------- Income Before Extraordinary Items & Discontinued Operations Adjusted Net Income 3,335 4,654 6,058 4,206 4,562 (23) 18 16 9 (7) ------------------- ------------------ ------------------ ------------------ Discontinued Operations --------------- 3,312 4,672 6,074 4,215 4,555 x rate for each year equals total income taxes/pretax income) (5 points)