Compute the percentage of ebitda to total revenues

Assignment Help Financial Accounting

Reference no: EM13899999

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.

Reference no: EM13899999

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