Refer to the annual report of MCI and answer the following questions.

a. Compute the current ratio, working capital, and current liabilities as a percentage of total assets for the company, and comment on any trends that may have developed over the last several years.

b. What are the principle components of telecommunications expense? Explain what the account “Accrued telecommunications expense” represents.

c. What plans have the company adopted that are designed primarily to encourage the employees to act in the interests of the shareholders?

d. Briefly describe the litigation facing MCI as of December 31, 1994.

e. (Appendix 10A) What kind of pension plans does MCI provide for its employees, and is the defined-benefit plan underfunded as of the end of 1994? How do you know?

f. (Appendix 10A) What effect did the adoption of SFAS 112 “Employers’ Accounting for Postemployment Benefits” have on the company’s financial statements? Why? g. (Appendix 10B) How large are deferred income taxes relative to the company’s long-term debt, total liabilities, and total assets? Has this account increased or decreased over the last three years? Briefly explain why. What accounting practice by MCI has been the primary reason why its deferred income tax liability is relatively large? Compute MCI’s conser¬ vatism ratio, and comment on whether the company uses conservative accounting practices