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1、ConfirmingPagesLEARNINGOBJECTIVESAfterstudyingthischapter,youshouldbeableto:1.Describethecharacteristicsofbonds.p.5072.Reportbondspayableandinterestexpenseforbondssoldatparandanalyzethetimesinterestearnedratio.p.511LecturePresentationLP-10www.mhhe.com
2、/libby7e3.Reportbondspayableandinterestexpenseforbondssoldatadiscount.p.5144.Reportbondspayableandinterestexpenseforbondssoldatapremium.p.5195.Analyzethedebt-to-equityratio.p.5226.Reporttheearlyretirementofbonds.p.5237.Explainhowfinancingactivitiesare
3、reportedonthestatementofcashflows.p.524lib11021_ch10_504-549.indd50427/06/1012:30PMConfirmingPagesCHAPTERTENREPORTINGANDINTERPRETINGBONDSanybusinessesarenothouseholdnamesbutneverthelessplayanimportantroleinourdailylives.Morethan40percentofthenation’sf
4、reightismovedbyrailroad.AMleaderinthisindustryisBurlingtonNorthernSantaFe(BNSF).Lastyear,thecom-panymoved23milliontonsofwheat,8milliontonsoflumber,14.5milliontonsofsteel,and13milliontonsofplastic.Mostlikely,youhaveconsumedorusedaproducttodaythatmovedb
5、yrail.BNSFisinacapital-intensiveindustry.Ithasinvestedinveryexpensiveequipment,includ-ing6,500locomotivesandover82,000freightcars.Thecompanyowns23,000milesofrailtracksandspentover$2billionlastyearoncapitalinvestments.Manage-mentofcapital-intensivebusi
6、nessesFOCUSCOMPANY:faceanumberofchallenges.LargeinvestmentsmustbemadebasedonBurlingtonNorthernestimatesofcustomerdemandmanyyearsintothefuture.IfmanagementSantaFeunderinvests,customerswillbelosttoothercompanies.Ifanoverinvest-FINANCINGGROWTHWITHmentism
7、ade,moneywillbetiedupBONDSPAYABLEinassetsthatdonotgeneraterev-www.bnsf.comenueandprofitswillsuffer.Inadditiontodecidingupontheproperlevelofinvestmentinlong-termassets,managementmustpicktheoptimalbalanceoffinancingforthoseassets.BNSFfinancesitscapitali
8、nvestmentsfromthreesources:internallygeneratedfunds,investmentsbyowners,andborrowingsfromlong-termcreditors.Inthischapter,wewilldiscussbondsandlong-termdebt.BNSFhasdisclosedinformationaboutitslong-termborrowinginthenoteshowninExhibit 10.1.Much
