The average price of a gallon of gas in 2005 jumped $0.61 (38 percent) from $1.6

Question

The average price of a gallon of gas in 2005 jumped $0.61 (38 percent) from $1.61 in 2004 to $2.22 in 2005. Let's see whether these changes are reflected in the income statement of Chevron Corp. for the year ended December 31, 2005 (amounts in millions).

25,601     

29,501  

$ 10,462     

$ 17,997  

 

  2005 2004   Total revenues $ 189,200      $ 159,800     Costs of crude oil and products 144,902      102,548     Other operating costs

25,601     

29,501  

  Income before income tax expense 18,697      27,751     Income tax expense 8,235      9,754         Net income

$ 10,462     

$ 17,997  

Explanation / Answer

2005 2004 Total revenues $189,200 $159,800 Cost of crude oil 144,902 102,548 Operating costs 25,141 29,090 Income before tax 19,157 28,162 Income tax expense 8,235 $9,754 Net Income $10,922 $18,408 Times Interest Earned= Income before Income Taxes and Interest Expense/Interest Expense For 2005 year= $19,157/$460 41.64 times For 2004 year= $28,162/$411 68.52

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