Calculating and interpreting long-term liquidity ratios Data taken from the financial statements of Tokyo Electric, a Japanese generator and provider of electric services, appear below (amounts in billions of Japanese yen).

a. Compute the long-term debt ratio and the debt-equity ratio at the end of 2004, 2005, 2006, and 2007.

b. Compute the cash flow from operations to total liabilities ratio and the interest coverage ratio for 2005 through 2007.

c. How has the long-term liquidity risk of Tokyo Electric changed over this three-yearperiod?

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For the Year Net Income Before Interest and Income Taxes. Cash Flow from Operations.... Interest Expense.... 2006 2007 2005 * 651 1,074 ¥ 538 1,411 ¥635 936 161 155 165 On December 31 Long-Term Debt.. Total Liabilities Total Shareholders' Equity 2006 2007 2005 2004 ¥ 5,871 10,488 ¥ 7,391 11,540 ¥ 6,278 10,814 ¥ 7,150 11,247 2,502 2,360 3,034 2,780