Condensed balance sheets for 2017 and 2018 and the 2018 income statement for Goodyear, the world's largest tire company, are as follows (dollars in millions).

a. Assume that early in 2019 Goodyear is considering the following transactions (dollars in billions).
Treat each separately, and compute how it would affect the company's ratios of current assets divided by current liabilities and total liabilities divided by total shareholders' equity.
1. Purchase $1,000 in inventory on account.
2. Issue common stock for $2,000 cash.
3. Refinance a $500 short-term liability with a $500 long-term liability.
4. Purchase equipment in exchange for a $400 long-term note payable.
5. Pay a $1,000 short-term debt with cash.
b. Assume that the terms of Goodyear's long-term debt require the company to maintain a ratio of current assets divided by current liabilities of 1.20. Is this covenant restriction relevant to whether the company should enter into any of the above transactions? Explain.
c. How much cash could Goodyear pay for a long-term investment and still be in compliance with the covenant?

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2018 2017 $ 5,925 $ 6,079 Current assets Long-term assets 10,947 10,985 Total assets $16,872 $17,064 Current liabilities $4,781 $ 5,025 Long-term liabilities 7,021 7,189 Shareholders' equity 5,070 4,850 Total liabilities and $16,872 $17,064 shareholders' equity Revenues $15,475 Expenses 14,782 Net income 693