Compute and Interpret the Z-score
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 |
As of December 31, there were the approximate shares
outstanding:
2016 - 289 million
2015 - 303 million
As of December 31, the company's stock closed at the following
values:
2016 - $249.94
2015 - $219.80
(a) Compute and compare the Altman Z-scores for both years. (Do
not round until your final answer; then round your answers to two
decimal places.)
2016 Z-score = Answer
2015 Z-score = Answer
Which of the following explain the trend in the Z-scores from 2015
to 2016? (Select all that apply.)
Answer Lockheed improved its working capital by decreasing its
current liabilities.
Answer Lockheed decreased its liquidity due to an increase in
retained earnings.
Answer Lockheed improved its earnings before interest and taxes by
increasing its total net sales.
Answer The market value of Lockheed's equity improved over the
year.
Solution:
a.Z-scores for Lockheed
2016: (1.2 × $2,566 / $47,806) + (1.4 × $13,324 / $47,806) + (3.3 × $5,549 / $47,806) +(0.6 × $72,233 / $46,200) + (0.99 × $47,248/ $47,806)
= 2.75
2015:(1.2 × $655 / $49,304) + (1.4 × $14,238 / $49,304) + (3.3 × $4,712 / $49,304) +(0.6 × $66,599 / $46,207) + (0.99 × $40,536 / $49,304)
= 2.41
A slight upward shift in Z-score is there for 2016.Lockheed’s earnings and workingcapital both improved over the year as well as its market value of equity.
b.The financial health of the company improved slightly, though it still remains in the “gray area”of interpretation for Altman’s Z-score.
The Altman Z-scores have increased from 2015 to 2016 which indicates the company's bankruptcy risk has decreased.
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Compute and Interpret the Z-score Balance sheets and income statements for Lockheed Martin Corporation follow. Refer...
Compute and Interpret the Z-score 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...
Compute and Interpret the Z-score 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...
Compute and Interpret the Z-score 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...
Compute and interpret the Z-score 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 milions 2016 2015 Net als Products 5 40.365 $34368 Services 6.893 5.668 Totalne ses 40536 Cost of sales Products 36601,001) Services 16,6400 Severance and other charges 1500 Other unallocated costs Total cost of a 421) Gross Profe Other coment Operating promet 182 220 Otherton-perating income (op.net Earnings before...
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)...
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)...
P4-29. Compute and Interpret Liquidity, Solvency, and Coverage Ratios Information from the balance sheet, income statement, and statement of cash flows for Lockheed Martin Corporation follow. Refer to these financial statements to answer the requirements. 2016 2015 $40,365 6,883 $34,868 5,668 40,536 47,248 (36,616) (6,040) (31,091) (4,824) (82) LOCKHEED MARTIN CORPORATION Consolidated Statements of Earnings Year Ended December 31 (in millions) Net sales Products.. Services .... Total net sales ........ Cost of sales Products ..... Services Severance charges.. Other unallocated,...
Looking for help on the questions below for the financial metrics required. If someone could please also explain why my Liability to Equity ratio for 2016 is incorrect; while my ratio for 2015 is correct and I used the same process to get both numbers? Thanks 550 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)...
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. Income Statement Year Ended December 31 (In millions) 2005 2004 2003 Net sales Products $31,518 $30,202 $ 27.290 Service 5,695 5,324 4,534 37,213 35,526 31,824 Cost of sales Products 27,892 27,667 25,306 Service 5,073 4,765 4,099 Unallocated coporate costs 803 914 443 33,768 33,346 29,848 3,445 2,180 1,976 Other income (expenses), net (449)...
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. Income Statement Year Ended December 31 (In millions) 2005 2004 2003 Net sales Products $ 31,518 $ 30,202 $ 27,290 Service 5,695 5,324 4,534 37,213 35,526 31,824 Cost of sales Products 27,932 27,637 25,306 Service 5,073 4,765 4,099 Unallocated coporate costs 803 914 443 33,808 33,316 29,848 3,405 2,210 1,976 Other income (expenses),...