Excerpts from the 2012 financial statements for Goodyear are as follows (dollars in millions):

REQUIRED:

Assume that you have some capital to invest and that you are considering an equity investment in Goodyear. Review the financial statements and comment on Goodyear as an investment. Support your recommendation with financial ratios. Assume a tax rate of 30 percent. Interest expense is $316 in 2010, $330 in 2011, and $357 in 2012.

Transcribed Image Text:

2012 2011 2010 Balance Sheet $ 8,498 $ 9,812 Current assets 8,045 Long-term assets 8,475 7,817 7,585 Current liabilities 5,322 5,929 5,307 Long-term liabilities 10,492 10,076 8,818 Contributed capital (211) 437 639 Retained earnings 1,370 1,187 866 Income Statement $20,992 $2,767 $18,832 Revenues Expenses 20,809 22,446 19,048 Statement of Cash Flows $ 1,038 $ 773 $ 924 Net cash from operating activities (859) Net cash from investing activities (1,123) (902) 896 Net cash from financing activities (406) 18 (491) Change in cash balance 767 83 Beginning cash balance 2,772 2,005 1,922 $ 2,281 $ 2,772 $ 2,005 Ending cash balance