In: Accounting
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.
Consolidated Statements of Earnings | |||
---|---|---|---|
Year Ended December 31 (In millions) | 2016 | 2015 | |
Net sales | |||
Products | $ 40,365 | $ 34,868 | |
Services | 6,883 | 5,668 | |
Total net sales | 47,248 | 40,536 | |
Cost of sales | |||
Products | (36,616) | (31,091) | |
Services | (6,040) | (4,824) | |
Severance and other charges | (80) | (82) | |
Other unallocated costs | 550 | (47) | |
Total cost of sales | (42,186) | (36,044) | |
Gross Profit | 5,062 | 4,492 | |
Other income, net | 487 | 220 | |
Operating profit | 5,549 | 4,712 | |
Interest expense | (663) | (443) | |
Other non-operating income (expense), net | - | 30 | |
Earnings before taxes | 4,886 | 4,299 | |
Income tax expense | (1,133) | (1,173) | |
Net earnings from continuing operations | 3,753 | 3,126 | |
Net (loss) earnings from discontinued operations | 1,549 | 479 | |
Net earnings | $ 5,302 | $ 3,605 |
Consolidated Balance Sheets | ||
---|---|---|
December 31 (in millions, except par value) | 2016 | 2015 |
Assets | ||
Current Assets | ||
Cash and cash equivalents | $ 1,837 | $ 1,090 |
Receivables, net | 8,202 | 7,254 |
Inventories, net | 4,670 | 4,819 |
Other current assets | 399 | 441 |
Assets of discontinued operations | - | 969 |
Total current assets | 15,108 | 14,573 |
Property, plant and equipment, net | 5,549 | 5,389 |
Goodwill | 10,764 | 10,695 |
Intangible assets, net | 4,093 | 4,022 |
Deferred income taxes | 6,625 | 6,068 |
Other noncurrent assets | 5,667 | 5,396 |
Assets of discontinued operations | - | 3,161 |
Total assets | $ 47,806 | $ 49,304 |
Liabilities and stockholders' equity | ||
Current Liabilities | ||
Accounts payable | $ 1,653 | $ 1,745 |
Customer advances and amounts in excess of costs incurred | 6,776 | 6,703 |
Salaries, benefits and payroll taxes | 1,764 | 1,707 |
Current maturities of long-term debt | - | 956 |
Other current liabilities | 2,349 | 1,859 |
Liabilities of discontinued operations | - | 948 |
Total current liabilities | 12,542 | 13,918 |
Long-term debt | 14,282 | 14,305 |
Accrued pension liabilities | 13,855 | 11,807 |
Other post-retirement benefit liabilities | 862 | 1,070 |
Other noncurrent liabilities | 4,659 | 4,902 |
Liabilities of discontinued operations | - | 205 |
Total Liabilities | 46,200 | 46,207 |
Stockholders' equity | ||
Common stock, $1 par value per share | 289 | 303 |
Additional paid-in capital | -- | -- |
Retained earnings | 13,324 | 14,238 |
Accumulated other comprehensive loss | (12,102) | (11,444) |
Total stockholders' equity | 1,511 | 3,097 |
Noncontrolling interests in subsidiary | 95 | - |
Total equity | 1,606 | 3,097 |
Total liabilities and stockholders' equity | $ 47,806 | $ 49,304 |
Consolidated Statement of Cash Flows | |||
---|---|---|---|
Year Ended December 31 (in millions) | 2016 | 2015 | |
Operating Activities | |||
Net earnings | $ 5,302 | $ 3,605 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 1,215 | 1,026 | |
Stock-based compensation | 149 | 138 | |
Deferred income taxes | (152) | (445) | |
Severance charges | 99 | 102 | |
Gain on divestiture of IS&GS business | (1,242) | - | |
Gain on step acquisition of AWE | (104) | - | |
Changes in operating assets and liabilities: | |||
Receivables, net | (811) | (256) | |
Inventories, net | (46) | (398) | |
Accounts payable | (188) | (160) | |
Customer advances and amounts in excess of costs incurred | 3 | (32) | |
Post-retirement benefit plans | 1,028 | 1,068 | |
Income taxes | 146 | (48) | |
Other, net | (210) | 501 | |
Net cash provided by operating activities | 5,189 | 5,101 | |
Investing Activities | |||
Capital expenditures | (1,063) | (939) | |
Acquisition of business/investments in affiliated | - | (9,003) | |
Other, net | 78 | 208 | |
Net cash used for investing activities | (985) | (9,734) | |
Financing Activities | |||
Special cash payment from divestiture of IS&GS businessk | 1,800 | - | |
Repurchases of common stock | (2,096) | (3,071) | |
Proceeds from stock option exercises | 106 | 174 | |
Dividends paid | (2,048) | (1,932) | |
Proceeds from the issuance of long-term debt | - | 9,101 | |
Repayments of long-term debt | (952) | - | |
Proceeds from borrowings under revolving credit facilities | - | 6,000 | |
Repayments from borrowings under revolving credit facilities | - | (6,000) | |
Other, net | (267) | 5 | |
Net cash (used for) financing activities | (3,457) | 4,277 | |
Net change in cash and cash equivalents | 747 | (356) | |
Cash and cash equivalents at beginning of year | 1,090 | 1,446 | |
Cash and cash equivalents at end of year | $ 1,837 | $ 1,090 |
(a) Compute Lockheed Martin's current ratio and quick ratio for
2016 and 2015. (Round your answers to two decimal places.)
2016 current ratio = Answer
2015 current ratio = Answer
2016 quick ratio = Answer
2015 quick ratio = Answer
(b) Compute total liabilities-to-equity ratios and total
debt-to-equity ratios for 2016 and 2015 . (Round your answers to
two decimal places.)
2016 total liabilities-to-stockholders' equity = Answer
2015 total liabilities-to-stockholders' equity = Answer
2016 total debt-to-equity = Answer
2015 total ebt-to-equity = Answer
(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.)
2016 times interest earned = Answer
2015 times interest earned = Answer
2016 cash from operations to total debt = Answer
2015 cash from operations to total debt = Answer
2016 free operating cash flow to total debt = Answer
2015 free operating cash flow to total debt = Answer