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Compute the long-term debt to long-term capital ratio

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Balance sheet as of January 31, 2009                                    GAP Inc                  LTD Brands

Current liabilities                                                                           2158                        1255

Long term debt                                                                                    0                           2897

Other non current liabilities                                                         1019                            946

Shareholders equity                                                                       4387                          1874

Total                                                                                                  7564                            6972

Minimum payment under operating leases

2009                                                                                                   1069                             478

2010                                                                                                    927                              455

2011                                                                                                     712                             416

2012                                                                                                     520                              373

2013                                                                                                     386                              341

After 2013                                                                                         1080                              1334

Total                                                                                                   4694                              3397

a. Compute the present value of operating lease obligations using a 6.25% discount rate.

Assume that all cash ?ows occur at the end of each year. Also assume that the minimum lease payments after 2017 occur evenly over a five-year period.=

b.Re-compute the long-term debt to long-term capital ratio assuming that Starbucks capitalizes operating leases and reports the long-term portion as part of long-term debt.

c. Re-compute the long-term debt to long-term capital ratio assuming that the long-term

Reference no: EM131800784

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