Needing help with questions A-G in the attached spreadsheet

Chapter 6 Problem 14 a. What were HCA's liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009? b. What percentage decline in EBIT could HCA have suffered each year between 2005 and 2009 before the company would have been unable to make interest payments out of operating earnings, where operating earnings is defined as EBIT? c. How volatile have HCA's cash flows been over the period 2005 - 2009? d. Calculate HCA's return on invested capital (ROIC) in the years 2005 - 2009. e. HCA is the largest private operator of health care facilities in the world with hundrd of facilities in over 20 states. In 2006, private equity buyers took the company private in a $31.6 billion acquisition. In broad terms how costly do you think financial distress would be to HCA if it began to appear the company might be having difficulty servicing its debt? Why? f. In late 2010 HCA announced an intended dividend recapitalization in which it would pay a $2 billion dividend to shareholders financed in large part by a $1.53 billion bond offering. At an interest rate of 6 percent, how would the added debt have affected HCA's times-interest-earned ratio in 2009? g. Please comment on HCA's capital structure. Is its 2009 debt level prudent? Is it smart to add another $1.53 billion to this total? Why, or why not? HCA INC ANNUAL INCOME STATEMENT ($ MILLIONS, EXCEPT PER SHARE) Sales Cost of Goods Sold Gross Profit Depreciation Operating Profit Interest Expense Non-Operating Income/Expense Pretax Income Total Income Taxes Minority Interest Net Income Dec09 Dec08 Dec07 Dec06 Dec05 $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455 24,826 24,023 22,480 21,448 20,391 5,226 4,351 4,378 4,029 4,064 1,425 3,801 1,987 188 2,002 1,416 2,935 2,021 256 1,170 1,426 2,952 2,215 661 1,398 1,391 2,638 955 179 1,862 1,374 2,690 655 412 2,327 627 321 268 229 316 208 625 201 725 178 673 $ 874 $ 1,036 $ 1,424 $ 1,054 $ ANNUAL BALANCE SHEET ASSETS Cash & Equivalents Net Receivables Inventories Other Current Assets Total Current Assets Gross Plant, Property & Equipmen Accumulated Depreciation Dec09 Dec08 Dec07 Dec06 Dec05 $ 312 $ 465 $ 393 $ 634 $ 336 3,692 3,780 3,895 3,705 3,332 802 737 710 669 616 1,771 1,319 1,207 1,070 931 6,577 6,301 6,205 6,078 5,215 24,669 13,242 23,714 12,185 22,579 11,137 21,907 10,238 20,818 9,439 Net Plant, Property & Equipment 11,427 11,529 11,442 11,669 11,379 Investments at Equity Other Investments Intangibles Deferred Charges Other Assets TOTAL ASSETS 853 1,166 2,577 418 1,113 24,131 842 1,422 2,580 458 1,148 24,280 688 1,669 2,629 539 853 24,025 679 1,886 2,601 614 148 23,675 627 2,134 2,626 85 159 22,225 846 1,460 2,007 4,313 404 1,370 224 1,912 3,910 308 1,370 190 1,981 3,849 293 1,415 1,868 3,576 586 1,484 1,825 3,895 Long Term Debt Deferred Taxes Minority Interest Other Liabilities TOTAL LIABILITIES 24,824 1,008 2,825 32,970 26,585 995 2,890 34,380 27,000 938 2,612 34,399 28,115 390 907 1,936 34,924 9,889 830 828 1,920 17,362 Preferred Stock Common Stock Capital Surplus Retained Earnings Common Equity 147 1 226 (9,213) (8,986) 155 1 165 (10,421) (10,255) 164 1 112 (10,651) (10,538) 125 1 (11,375) (11,374) LIABILITIES Long Term Debt Due In One Year Accounts Payable Taxes Payable Accrued Expenses Total Current Liabilities 4 4,859 4,863 TOTAL EQUITY (8,839) (10,100) (10,374) (11,249) 4,863 TOTAL LIABILITIES & EQUIT $ 24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225