Questions
Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information for...

Compute and Interpret Liquidity, Solvency and Coverage Ratios
Selected balance sheet and income statement information for Calpine Corporation for 2004 and 2006 follows.

($ millions) 2004 2006
Cash $ 1,376.73 $ 1,503.36
Accounts receivable 1,097.16 735.30
Current assets 3,563.56 3,168.33
Current liabilities 3,285.39 6,057.95
Long-term debt 16,940.81 3,351.63
Short-term debt 1,033.96 4,568.83
Total liabilities 22,628.42 25,743.17
Interest expense 1,516.90 1,288.29
Capital expenditures 1,545.48 211.50
Equity 4,587.67 (7,152.90)
Cash from operations 9.89 155.98
Earnings before interest and taxes 1,589.84 1,877.84

(a) Compute the following liquidity, solvency and coverage ratios for both years. (Round your answers to two decimal places.)
2006 current ratio = Answer
2004 current ratio = Answer

2006 quick ratio = Answer
2004 quick ratio = Answer

2006 liabilities-to-equity = Answer
2004 liabilities-to-equity = Answer

2006 total debt-to-equity = Answer
2004 total debt-to-equity = Answer

2006 times interest earned = Answer
2004 times interest earned = Answer

2006 cash from operations to total debt = Answer
2004 cash from operations to total debt = Answer

2006 free operating cash flow to total debt = Answer
2004 free operating cash flow to total debt = Answer

(b) Which of the following best describes the company's credit risk?

Both the quick ratio and current ratio for 2006 are lower than 1.0 and have increased in the past two years. Along with interest coverage ratios that are exceedingly high, the probability that the company will face default has significantly increased.

Both the quick ratio and current ratio for 2006 are lower than 1.0 and have decreased in the past two years. Along with interest coverage ratios that are exceedingly low, the probability that the company will face default has significantly increased.

Both the quick ratio and current ratio for 2006 are above 1.0 and have decreased in the past two years. Along with interest coverage ratios that are exceedingly low, the probability that the company will face default has significantly decreased.

Both the quick ratio and current ratio for 2006 are above 1.0 and have increased in the past two years. Along with interest coverage ratios that are exceedingly high, the probability that the company will face default has significantly decreased.

In: Accounting

Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was...

Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was negative in Hong Kong and we say Hong Kong suffered deflation in 2004.) Many people regard deflation as bad. Can you explain why? Is deflation sometimes good (at least for some people)?

In: Economics

Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was...

Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was negative in Hong Kong and we say Hong Kong suffered deflation in 2004.) Many people regard deflation as bad. Can you explain why? Is deflation sometimes good (at least for some people)?

In: Economics

catch me if you can (2002) write a report about catch me if you can (2002)...

catch me if you can (2002) write a report about catch me if you can (2002) must be 900 words that fully describes the movie including describing the main characters, the fraud situation in the movie, and how the situation plays out. The second part of the paper should discuss the actual persons and/or companies on which the movie focuses: Identify these actual persons / company; identify the type(s) of fraud(s) are alleged in the film; discuss your personal feelings about these people about the film; after doing some research, discuss what has happened to the people / companies featured in the film.

In: Operations Management

On July 1, 2002, Enjoy Toys Company issued $10 million in 10-year, 12% debenture bonds. Interest...

On July 1, 2002, Enjoy Toys Company issued $10 million in 10-year, 12% debenture bonds. Interest is payable semiannually on January 1 and July 1. Bond discounts and premiums are amortized by the straight-line method at each interest payment date and at year-end. The company’s fiscal year ends at December 31.
Required 1. July 1, 2002 to record the issuance of bonds at par value. 2. Make the necessary entries at December 31, 2002, under each of the following assumptions: (a)The bonds were issued at 97. (b)The bonds were issued on 102. *

In: Accounting

Focussing upon current UK macroeconomic issues With reference to the present situation (March/April 2020) relating to...

Focussing upon current UK macroeconomic issues

With reference to the present situation (March/April 2020) relating to the ‘Covid 19’ Coronavirus which is impacting with extremely adverse effects upon the world health situation and much of the world macroeconomy

Explain in macroeconomic terms how the above virus is impacting upon the following economic sectors:

The UK commercial aerospace sector these typically carrying holiday and business passengers; and the UK retail food supply sector (supermarkets such as Tesco, Sainsbury, ASDA etc).

Focus upon the effects which may be impacting upon the short-run and the longer run viability of these businesses, how ‘Bandwagon’ effects may be impacting upon the sectors and the measures that Government can implement in order to influence these outcomes.

In: Economics

What signs might alert you to a potential professional boundary violation or crossing? 250 words please...

What signs might alert you to a potential professional boundary violation or crossing?

250 words please and no plagiarism. Thanks!

In: Nursing

Write the simplified conservation of momentum equation for boundary layer on a flat plate and explain...

Write the simplified conservation of momentum equation for boundary layer on a flat plate and explain the physical meaning of each term in the equation.

In: Mechanical Engineering

Toolkit Exercise 10.3 Application of Simon’s Control Systems Model Consider a change you are familiar with...

Toolkit Exercise 10.3

Application of Simon’s Control Systems Model

Consider a change you are familiar with (higher education change).

1.      Describe the control processes and measures that were used with the change (i.e., the belief, interactive, boundary, and diagnostic controls). When and how were they used and what was their impact?

      a.    During the earlier stages of the change initiative

      b.    During the middle stages of the change initiative

      c.    During the latter stages of the change initiative

2.      Were there forbidden topics in the organization, such as questions related to strategy or core values? Were those limits appropriate and did anyone test those limits by raising controversial questions or concerns? Were small successes celebrated along the way?

3.      What changes could have been made with the control processes and measures that would have assisted in advancing the interests of the change?

In: Operations Management

You are Given the Following Information for an OECS country for the years 2005 and 2004:...

You are Given the Following Information for an OECS country for the years 2005 and 2004:

GDP Component (EC$MN)

2005

2004

Personal consumption

2949.9

2920.4

Government expenditure

1098.3

933.6

Investment

629.7

623.4

Exports of goods and services

2590.7

2538.8

Imports of goods and services

2305.2

2259.1

  1. Calculate GDP for the years 2005 and 2004.You have just calculated nominal GDP.

2.You are told that inflation in 2005 was approximately 2%,what would be your initial estimate of real GDP growth in 2025?Briefly outline the difference between nominal and real GDP.

In: Economics