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Essay / Research Paper Abstract
This 3 page paper looks at the debt ratios of Lockheed Martin for 2008, calculating the total debt ratio, as well as the current and the long term debt ratios, the debt to equity ratios and then assesses the company and compares it to two competitors.
Page Count:
3 pages (~225 words per page)
File: TS14_TElockhdebt.rtf
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Unformatted sample text from the term paper:
by dividing the total debt by the total assets. This can be adjusted to look only at the current debt or only the long term debt. Looking at Lockhead Martin,
using the 2008 results the following is found Figure 1 Lockheed Martin 2008 Debt Ratio Total debt ratio Current debt ratio Long term debt ratio Debt (a) 30,574
10,683 19,891 Assets (b) 33,439 10,542 22,897 Ratio (a/b) 0.914322 1.013375 0.868716 The ratio is then expressed as 0.91:1 for the total debt ratio, 1.01:1 for the current debt ratio
and 1:0.86 for the long term debt ratio. The use of the debt to equity ratio can also be valuable when assessing a firm. This is also known as
the financial leverage ratio. This is the total debt divided by the total equity. This is usually only undertaken for the total debt, looking at this only for short term
or only long term debt is not as valuable as the equity figure remains the same. The results are shown below Figure 2 Debt to Equity Ratio Total debt
to equity ratio Short term debt to equity ratio Long term debt to equity Debt 30,574 10,683 19,891 Equity 2,865 2,865 2,865 Ratio 10.67155 3.728796 6.942757 Therefore, the debt to
equity ratio is 10.67:1, the short term, debt to equity ratio is 3.73:1 and the long term debt to equity ratio is 6.94:1 Question 2 Looking at these
ratios they appear to show that the company has a high level of debt, overall there is a positive equity value within the firm, but the equity level, that is
the finds that are owned by the shareholders are low and the debt levels are high. This is a highly geared firm, and the level of gearing has increased with
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