FIN 3000 Ch 2 HW

From the income statement, the corporation had a net income of $724 million for the year. Total dividends were $106 million. There were 400 million shares outstanding. How much is the earnings per share? $1.81 $0.72 $3.00 $2.72 $1.18

$724,000,000/$400,000,000= $1.81

Net working capital represents current assets plus current liabilities. True or False

False

The balance sheet of XYZ Company is shown below. What is the Net Working Capital for the company? ASSETS LIABILITIES & OWNERS' EQUITY Current assets $ 300 Current liabilities $ 240 Net fixed assets 1,500 Long-term debt 700 Owners' equity 860 Total assets $ 1,800 Total liabilities and equity $ 1,800

Net Working Capital = Current Assets - Current Liabilities Net Working capital = $300-$240 =$60

The first thing reported on an income statement would usually be: Depreciation Interest paid Taxes paid Financing expenses Revenues

Revenues

Billy's Exterminators, Inc., has sales of $817,000, costs of $343,000, depreciation expense of $51,000, interest expense of $38,000, and a tax rate of 21 percent. The firm just paid out $95,000 in cash dividends. The company has 90,000 shares of common stock outstanding. What is the earnings per share, or EPS, figure? What is the dividends per share?

Sales ... $817,000 Costs ... $343,000 Depreciation expense ... $51,000 EBIT ... $423,000 Interest expense ... $38,000 EBT ... $385,000 Taxes (21%) ... $80,850 Net income ... $304,150 Addition to retained earnings ... $209,150 Earnings per share ... $3.38 Dividends per share ... $1.06

Earnings per share can be calculated as Net Income/Total shares outstanding. True or False

True

A _________ __________ is one that has a life of less than one year, meaning they must be paid within the year. total asset owners equity fixed asset current liability liquid equity

current liability

As the degree of financial leverage increases, the: probability a firm will encounter financial distress increases. amount of a firm's total debt decreases. accounts payable balance decreases. number of outstanding shares of stock increases. less debt a firm has per dollar of total assets.

probability a firm will encounter financial distress increases.

From the income statement, the corporation had a net income of $724 million for the year. Total dividends were $106 million. There were 400 million shares outstanding. How much is the dividends per share? $0.265 $0.075 $0.121 $0.205 $0.562

$106,000,000/$400,000,000= $0.265

The balance sheet for the Capella Corporation is as follows: Assets Liabilities and Shareholders' Equity Current assets $ 300 Current liabilities $110 Net fixed assets 1,200 Long-term debt 500 Shareholders' equity 890 Total assets $ 1,500 Total liabilities and shareholders' equity $ 1,500 What is the Net Working Capital for Capella Corporation? $410 $190 $890 $110 $300

$300-$110= $190

Griffin's Goat Farm, Inc., has sales of $796,000, costs of $327,000, depreciation expense of $42,000, interest expense of $34,000, and a tax rate of 21 percent. What is the net income for this firm?

$310,470 (796,000 - 327,000 - 42,000 - 34,000=393,000 393,000 x 21% = 82,530 393,000 - 82,530 = $310470)

Griffin's Goat Farm, Inc., has sales of $574,000, costs of $315,000, depreciation expense of $41,000, interest expense of $17,000, and a tax rate of 21 percent. What is the net income for this firm? $80,460 $158,790 $175,790 $199,790 $216,790

$574,000-$315,000-$41,000= $218,000 $218,000-$17,000= $201,000 $201,000 x 21%= $42,210 $201,000-$42,210= a net income of $158,790

The Balance Sheet Identity is: The Sum of all assets minus the liabilities The value of the Owners Equity The same as the Net Working Capital Assets + Liabilities = Owners Equity Assets = Liabilities + Owners Equity

Assets = Liabilities + Owners Equity

Wims, Inc., has current assets of $4,900, net fixed assets of $27,300, current liabilities of $4,100, and long-term debt of $10,200. a. What is the value of the shareholders' equity account for this firm? b. How much is net working capital?

a. $17,900 b. $800

Griffin's Goat Farm, Inc., has sales of $796,000, costs of $327,000, depreciation expense of $42,000, interest expense of $34,000, a tax rate of 21 percent, and paid out $95,000 in cash dividends. The common stock outstanding is 80,000 shares. a. What is the earnings per share figure? b. What is the dividends per share figure?

a. Earnings per share=Net Income/Total shares outstanding 796,000-327,000-42,000= $427,000 427,000-34,000= $393,000 393,000 x 21%= $82,530 393,000-82,530= $310,470 Net Income $310,470/80,000= $3.88 Earnings per share b. Dividends per share=Total dividends/Total share outstanding $95,000/80,000= $1.19 Dividends per share