Complete M7-12 parts A and B. Complete M7-15 M7-12. Interpreting Bond Footnote D

Question

Complete M7-12 parts A and B.
Complete M7-15 M7-12. Interpreting Bond Footnote Disclosures Bristol-Myers Squibb Co. reports the follows part of is MD&EA; in its 2015 104 Bristol-Mvers S Obligations Expiring by Period Later S millions) Maturity Date Total 2016 2017 2018 2019 2020 Years Long-term debt... $14,972 $1,761 $1,647 $724 $1,081 $506 $9,253 a. What does this information indicate about Bristol-Myers Squibb's future payment obligations for 2016 through 2018? b. What implications does this payment schedule have for our evaluation of Bristol-Myers Squibb's liquidity and solvency?

Explanation / Answer

M7-12 parts A and B. a. The information indicate in the footnotes implied that Bristol-Myers Squibb has debt maturing in 2016 , 2017 and 2018 , $1761 million , $1647 million and $724 million respectively. b.This payment schedule implied Bristol-Myers Squibb will required cash for meeting debt obligations which schedule to get mature in near-term .This information is very important from analyst point of view as it will impact liquidity and solvency position. Analysts may review the company’s recent operating cash-flows to determine how much of its operating cash flow would be required to pay-off the debt and find out what other alternatives company is thinking to meet debt obligation like refinance the debt or if company is not refinancing the debt then they have to use operating cash flow to make debt payment in that company has to hold investment opportunity for time being ,analyst will review how this would impact solvency and liquidity.

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