Intel 6.16

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The 2007 Intel Annual Report can be found at the following Web site: www.prenhall.com/ fraser. (a) Using the Intel Annual Report, calculate key financial ratios for all years presented. (b) Using the library, find industry averages to compare to the calculations in (a). (c) Write a report to the management of Intel. Your report should include an evaluation of short-term liquidity, operating efficiency, capital structure and long-term solvency, profitability, market measures, and a discussion of any quality of financial reporting issues. In addition, strengths and weaknesses should be identified, and your opinion of the investment potential and the creditworthiness of the firm should be conveyed to management.

|(a) and (b) |2007 |2006 |2005 |Ind. | | | | | |Avg.* | |Short-term liquidity | | | | | |Current ratio |2.79 |2.15 | |2.2 | |Quick ratio |2.39 |1.64 | |1.1 | |Cash flow liquidity ratio* |3.27 |2.42 | | | |Average collection period |25 days |28 days | |53 days | |Days inventory held |67 days |92 days | |81 days | |Days payable outstanding |47 days |48 days | |38 days | |Cash conversion cycle |45 days |72 days | |96 days | |Operating efficiency | | | | | |Accounts receivable turnover |14.88 |13.06 | |7.0 | |Inventory turnover |5.46 |3.98 | |4.5 | |Accounts payable turnover |7.81 |7.61 | |9.5 | |Fixed asset turnover |2.27 |2.01 | |9.1 | |Total asset turnover |.69 |.73 | |1.1 | |Leverage | | | | | |Debt ratio |23.16% |24.02% | |53.9% | |Long-term debt to total capitalization |4.43% |4.79% | | | |Debt to equity |0.30 |0.32 | |0.8 | |Financial leverage index |1.30 |1.31 | | | |Times interest earned |548 times |236 times |636 times |6.1 times | |Cash interest coverage |1,027 times |523 times |669 times | | |Fixed charge coverage |50 times |32 times |72 times | | |Cash flow adequacy**...
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