《财务报表分析与运用杰拉尔德课后答案英文版第七章.docVIP

Chapter 7 Solutions Overview: Problem Length Problem #s {S} 2, 3, 5, 8, and 10 {M} 1, 4, 6, 7, 9, 11, 12, and 13 Appendices {M} 7A-1 and 7B-1 {L} 7A-2 and 7B-2 1.{M} Exhibit 7S-1 contains the calculations required. Exhibit 7S-1. Chevron Adjustments for Capitalization of Interest Amounts in $ millions part c Year 1995 1996 1997 1998 1999 1999/95 As reported Interest expense $ 401 $ 364 $ 312 $ 405 $ 472 1.18 Pretax income 1,789 4,740 5,502 1,834 3,648 2.04 Net income 930 2,607 3,256 1,339 2,070 2.23 Capitalized interest 141 108 82 39 59 Amortization of capitalized interest 47 24 28 35 9 a. Calculations EBIT $2,190 $5,104 $5,814 $2,239 $4,120 Times interest earned 5.46 14.02 18.63 5.53 8.73 1.60 b. Adjusted Net capitalized interest $ 94 $ 84 $ 54 $ 4 $ 50 After 35% income tax 61 55 35 3 33 Interest expense 542 472 394 444 531 0.98 EBIT 2,237 5,128 5,842 2,274 4,129 (i) Times interest earned 4.13 10.86 14.83 5.12 7.78 1.88 (ii) % reduction from reported ratio -24.4% -22.5% -20.4% -7.4% -10.9% Pretax income $1,695 $4,656 $5,448 $1,830 $3,598 2.12 (iii) Net income 869 2,552 3,221 1,336 2,038 2.34 % reduction from reported -6.6% -2.1% -1.1% -0.2% -1.6% b. (iv) Expensing all interest reduces net income for each year. However the effect diminishes over time. c. (i) Because the amount of interest capitalized declined over time, restatement reduces the rate of increase in interest expense. (ii) While the interest coverage ratio is lower after restatement, its trend improves due to the lower growth rate of interest expense. (iii)Both pretax and net income are lower after restatement but their growth rate improves due to the lower growth rate of interest expense. d. The restated dat