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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 $ 30,202 $ 27.290 Service 5,695 5:324 4,534 37 213 35 526 31 824 Cost of sales Products 27,892 27,667 25,306 Service 5073 4,765 4,099 Unallocated coporate costs 914 443 33,768 33,345 29,848 3.445 2,180 1.976 Other income (expenses), net (449) (121 43 Operating profit 2,996 2059 2,019 Interest expense 370 425 487 Earnings before taxes 2.626 1.654 1.552 Income tax expense BO 479 Net earnings 51.325 $ 1.266 S 1,053 Balance Sheet December 31 (in millions) 2005 2004 Assets $ 2.484 $ 1.100 Cash and cash equivalents 429 Short-term investments 4.579 4,094 Receivables 1921 Inventories 861 982 Deferred income taxes 495 552 Other current assets 10769 8.99 Total current assets 698 Property, plant and equipment, net 196 12 Investments in equity securities B407 Goodwill 560 Purchased intangibles, net 361 1000 renai pension asset 368 1864 3924 392 6 e 672 DOTCHILE STEEL December 31 (In millions) 2005 2004 Assets Cash and cash equivalents $ 2,484 $ 1,100 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 10,769 8,993 Property, plant and equipment, net 3,924 3,599 Investments in equity securities 196 812 Goodwill 8,447 7,892 Purchased intangibles, net 560 Prepaid pension asset 1.360 1,030 Other assets 2.728 2.596 Total assets $ 27,984 5 25,594 Liabilities and stockholders' equity Accounts payable $ 1,998 5 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 75 Other current liabilities 1.422 Total current liabilities 9,429 8,566 Long-term det 4,784 5.224 Accrued pension liabilities 2,217 1.580 Other postretirement benefit abilities 1,277 1,236 Other liabilities Stocicholders' equity Common stock spar value per share 432 438 Additional paid in capital 1,724 2.223 Retained earnings 7,278 5.915 Accumulated other comprehensive los (553) Other (3 Total stockholders equity 7.887 7,021 Total abilities and stockholders equity 327984 525,594 Consolidated Statement of Cash Flows Year Ended December 31 (in millions) 1.4515 1967 2005 2004 2003 Business Course Return to course 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 239 288 330 Customer advances and amounts in excess of costs incurred 296 (228) (285) Other 534 568 (13) Net cash provided by operating activities 3,194 2.924 1.809 Investing Activities Expenditures for property, plant and equipment (865) (769) (687) Acquisition of business/investments in affiliated companies (244) (91) 1821) Proceeds from divestiture of businesses/investments in affiliated companies 935 279 234 Purchase of short term investments, net (33) (156) (240) Other 28 29 53 Net cash used for investing activities (179) 1708) (1461) Financing Activities repayment of long-term debt (253) (1.049) (2.202) Issuances of long-term debt 1,000 Long-term debt repayment and issuance costs (12) (163) (175) Issuances of common stock 406 164 Repurchases of common stock 810) 1673) (482 Common stock dividends (462) (405) (261) Net cash used for financing activities 160 12,126) 2.076) Net increase (decrease) In cash and cash equivalents 1394 90 1.728) Cash and cash equivalents at beginning of year 1100 1010 2,738 Cash and cash equivalents at end of year $200 $ 100 XE D Common stock dividends 1462) (4051 1261) Net cash used for financing activities 1.6 2.126) 12.075) Net increase (decrease in cash and cash equivalents 1384 10 (1.7281 Cash and cash equivalents at beginning of year 1.100 1.010 2738 Cash and cash equivalents at end of year $249A 1100 51010 (a) Compute Lockheed Martin's current ratio and quick ratio for 2005 and 2004. (Round your answers to two decimal places.) 2005 current ratio = 0 2004 current ratio = 0 2005 quick ratio = 0 2004 quick ratio- 0 Which of the following best describes the company's current ratio and quick ratio for 2005 and 20042 OBoth the current and quick ratios have increased from 2004 to 2005. The company is fairly liquid The current ratio has increased while the quick ratio has decreased in the period from 2004 to 2005, which suggests the company has a shortage of oude OBoth the current and quick ratios have decreased from 2004 to 2005. The company is fairly illiquid, The current ratio has decreased while the quick ratio has increased in the period from 2004 to 2005, which suggests the company has a shortage of (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. O 2004 total liabilities-to-stockholders' equity = 0 0 Internity DusinessLourse *Return to course 2004 total liabilities-to-stockholders' equity = 0 2005 total debt-to-equity = 0 2004 total debt-to-equity = 0 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 decide OBoth the total liabilities-to-equity and total debt-to-equity ratios have decreased from 2004 to 2005. The difference between these two measures reveals that any solvency concerns the The total liabilities-to-equity ratio has increased while the total debt-to-equity ratio has decreased in the period from 2004 to 2005, which suggests the company has incredere OBoth the total liabilities-to-equity and total debt-to-equity ratios have increased from 2004 to 2005. These increases suggest that thelompany is less solvent (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 decimales 2005 times interest earned = 0 2004 times interest earned = 0 2005 cash from operations to total debt - 0 2004 cash from operations to total debt = 0 0 2005 free operating cash flow to total debts 2004 free operating cash flow to total debt = 0 of the following describes the company's times interest earned cash from operations to total debt, and free operating cash flow to total debt ratios for 2005 and 2000 Statut course 2005 free operating cash flow to total debt = 0 2004 free operating cash flow to total debt = 0 Which of the following describes the company's times interest earned, cash from operations to total debt, and free operating cash flow to total debt ratios for 2005 and 2000 Select all that Lockheed Martin's free operating cash flow to total debt ratio increased slightly over the year 2005 due to increased cash flow from operations and decreased levels of debt. Lockheed Martin's cash from operations to total debt ratio increased slightly over the year 2005 due to increased cash flow from operations and decreased ees of debt . Lockheed Martin's times interest earned increased significantly during 2005, due to both an increase in profitability and a decrease in interest expense Lockheed Martin's times interest earned decreased significantly during 2005, due to both a decrease in profitability and an increase in interest expense 1