The following income statement (in millions) is adapted from the XXXXXXXXXXK filing of Time Warner: Revenues $42,089 Cost of revenues 24,449 Gross profit $17,640 Selling, administrative, and other...

The following income statement (in millions) is adapted from the 2004 10-K filing of Time Warner: Revenues $42,089 Cost of revenues 24,449 Gross profit $17,640 Selling, administrative, and other expenses 10,300 Amortization of goodwill and other intangible assets 626 Other costs and expenses 549 Operating income $ 6,165 Interest expense 1,754 Other nonrecurring income 651 Income before taxes $ 5,062 Income tax expense 1,698 Net income $ 3,364 Included in the preceding income statement is depreciation of property, plant, and equipment of $6,132. 1. Compute the EBITDA for 2004. 2. Compute the percentage of EBITDA to total revenues for 2004. Round to one decimal place after converting to a percentage. 3. Compute the ratio of EBITDA to interest expense for 2004. Round to one decimal place. 4. Compute the ratio of long-term debt to EBITDA for 2004. The long-term debt as of December 31, 2004, was $20,703. Round to one decimal place. 5. Comment on the ability of Time Warner to meet its interest obligations.



May 26, 2022
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