please just focusing on iv, v, vi and vii, thank you.
Deferred tax credits 352 347 363 336 345 354 Total liabilities 3,838 2,951 2,804 3,790 4,863 5.484 Common stock 50 50 100 100 100 100 Capital surplus 100 100 0 0 0 0 Retained earnings 2.350 2,508 2,581 2,715 2,850 2.975 Net worth 2,500 2,658 2,681 2,815 2,950 3.075 Total liabilities and net worth $ 6.338 $ 5.609 $ 5.485 $ 6.605 $ 7.813 $ 8.559Margaret O'Flaherty, a portfolio manager for MCF Investments, is considering investing in Alpine Chemical 7% bonds, which mature in 10 years. She asks you to analyse the company to determine the riskiness of the bonds. Alpine Chemical Company Financial Statements Years Ended December 31, (S in millions) 2012 2013 2014 2015 2016 2017 Assets Cash $ 190 $ 55 $ 0 $ 157 $ 249 $ Accounts receivable 0 1,637 2,087 1,394 2,143 3,493 3.451 Inventories 2,021 945 1,258 1,293 1,322 1,643 Other current assets 17 27 55 393 33 171 Current assets 3,865 3.114 2,707 3,986 5,097 5,265 Gross fixed assets 4,650 5,038 5,619 5,757 6,181 7,187 Less: Accumulated depreciation 2,177 2,543 2,841 3,138 3.465 3,893 Net fixed assets 2.473 2,495 2,778 2,619 2.716 3,294 Total assets $ 6,338 $ 5,609 $ 5,485 $ 6,605 $ 7,813 $ 8,559 Liabilities and net worth Notes payable $ 525 $ 750 $0 $ 1,300 $ 1,750 $ 1,900 Accounts payable 673 638 681 338 743 978 Accrued liabilities 303 172 359 359 483 761 Current liabilities 1,501 1,560 1,040 1,997 2,976 3,639 Long-term debt 1,985 1,044 1,401 1,457 1,542 1,491\fIncome statement 2012 2013 2014 2015 2016 2017 Net sales $ 14,100 $15,508 $13,875 $14,750 $19,133 $19,460 Cost of goods sold 10.200 11.220 9.366 10.059 13,400 13.117 Gross profit 3,900 4.288 4,509 4,691 5,733 6,343 Operating expense 2.065 2.203 2.665 2.685 3,472 3.885 Operating income 1.835 2.085 1.844 2,006 2,261 2,458 Interest expense 275 465 275 319 376 318 Depreciation expense 475 477 479 478 495 511 Profit before tax 1.085 1,143 1,090 1,209 1,390 1,629 Income taxes 193 115 265 145 192 150 Net income $ 892 $ 1,028 825 $ 1.064 $ 1,198 $ 1,479 Required: i. Using the data provided in the accompanying financial statements, calculate the following ratios for Alpine Chemical for 2017: a. EBIT/Interest expense b. Long-term debt/Total capitalization at December 31 c. Funds from operations/Total debt d. Operating income/Sales Use the following conventions: EBIT is earnings before interest and taxes; Total capitalization is interest-bearing long-term debt plus net worth; Funds from operations means net income plus depreciation expense; and Total debt includes interest-bearing short-term and long-term debt. (8 marks) ii. Briefly explain the significance of each ratio calculated in requirement (i) to the assessment of Alpine Chemical's creditworthiness. (8 marks)
