the following income statement in millions is adapted from the 287959

The following income statement (in millions) is adapted from the 2004 10 K filing of Time Warner:

Revenues ……………………………………………………$42,089

Cost of revenues …………………………………………… 24,449

Gross profit …………………………………………………$17,640

Selling, administrative, and other expenses ……………….. 10,300

Amortization of goodwill and other intangible assets …….. 626

Other costs and expenses ………………………………….. 549

Operating income ………………………………………….. $ 6,165

Interest expense ……………………………………………. 1,754

Other nonrecurring income ………………………………… 651

Income before taxes ……………………………………….. $ 5,062

Income tax expense ………………………………………… 1,698

Net income …………………………………………………. $ 3,364

Included in the preceding income statement is depreciation of property, plant, and equipment of $6,132.

1. Compute the EBITDA for 2004.

2. Compute the percentage of EBITDA to total revenues for 2004. Round to one decimal place after converting to a percentage.

3. Compute the ratio of EBITDA to interest expense for 2004. Round to one decimal place.

4. Compute the ratio of long term debt to EBITDA for 2004. The long term debt as of December 31, 2004, was $20,703. Round to one decimal place.

5. Comment on the ability of Time Warner to meet its interest obligations.