Net pension liability (in $ millions) 525 Present value of reductions of future contributions (in...
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Net pension liability (in $ millions) 525 Present value of reductions of future contributions (in $ millions) 48 Rickards adjusts the balance sheet and cash flow statement information presented in Exhibit 2 to better reflect the economic nature of certain items related to the pension plan. Exhibit 2 Select XYZ Balance Sheet and Cash Flow Data (in $ millions) Item Current Period Total assets 24,130 Total liabilities 17,560 Total equity 6,570 Total pension cost 96 Pension contribution 66 Financing cash flow 2,323 Operating cash flow 1,087 Effective tax rate 30% Finally, Rickards examines the data in Exhibit 3 and calculates the effect of a 100-basis-point increase in health care inflation on XYZs debt-to-equity ratio. Exhibit 3 Sensitivity of Accumulated Post-Employment Benefit Obligations to Changes in Assumed Health Care Inflation (in $ millions) Item 100-bp Increase 100-bp Decrease Benefit obligation change $93 $76 Benefit expense change $12 $10
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