Finance 300 Ch 2

1,854-1,281=573 573-226=347

A balance sheet has total assets of $1,854, fixed assets of $1,281, long-term debt of $679, and short-term debt of $226. What is the net working capital?

Interest Expense

The following is an expense for accounting purposes but is not an operating cash flow for financial purposes:

.28($272,600) − $75,000=1,328

The Daily News has projected annual net income of $272,600, of which 28 percent will be distributed as dividends. Assume the company will have net sales of $75,000 worth of common stock. What will be the cash flow to stockholders if the tax rate is 21 percent?

Increases expenses and lowers taxes

Depreciation for a tax-paying firm:

4,453 − ($46,632 − 41,191) = −988

Adison Winery had beginning long-term debt of $41,191 and ending long-term debt of $46,632. The beginning and ending total debt balances were $50,977 and $56,156, respectively. The company paid interest of $4,453 during the year. What was the company's cash flow to creditors?

487,000-(263,000+26,000+42,000)=156,000 156,000-(156,000*.21)=123,240

Andre's Bakery has sales of $487,000 with costs of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income?

(72,415 − 13,870) − ($68,847 − 15,932)=5,630

At the beginning of the year, Trees Galore had current liabilities of $15,932 and total debt of $68,847. By year end, current liabilities were $13,870 and total debt was $72,415. What is the amount of net new borrowing for the year?

4,915 + 9,365 =14,280

At the beginning of the year, Vendors, Inc., had owners' equity of $51,215. During the year, net income was $7,375 and the company paid dividends of $4,915. The company also repurchased $9,365 in equity. What was the cash flow to stockholders for the year?

47,552 − 17,709 − 12,336 − 7,285 =10,222 10,222 − 4,322 =5,900 5,900(.40) =2,360 10,222 + 7,285 − 2,360 =15,147

For the past year, Kayla, Inc., has sales of $47,552, interest expense of $4,322, cost of goods sold of $17,709, selling and administrative expense of $12,336, and depreciation of $7,285. If the tax rate is 40 percent, what is the operating cash flow?

$1,611

Galaxy Interiors income statement shows depreciation of $1,611, sales of $21,415, interest paid of $1,282, net income of $1,374, and costs of goods sold of $16,408. What is the amount of the noncash expenses?

594,000-245,000-42,000=307,000 307,000-19,000=288,000 288,000*.24=69,120 288,000-69,120=218,880

Griffin's Goat Farm, Inc., has sales of $594,000, costs of $245,000, depreciation expense of $42,000, interest expense of $19,000, and a tax rate of 24 percent. What is the net income for this firm?

1,900 + 8,700 + 11,600 − ($12,900 − 6,500)=15,800

JJ Enterprises has inventory of $11,600, fixed assets of $22,400, total liabilities of $12,900, cash of $1,900, accounts receivable of $8,700, and long-term debt of $6,500. What is the net working capital?

Current assets minus current liabilities

Net working capital is defined as:

209,411 − 218,470 + 42,822=33,763

Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending?

Expenses that do not directly affect cash flows

Noncash items refer to:

16,560 + 6,992 = 23,552 56,860 − 49,480 + 12,036 =19,416 50,533 − 19,416 − 23,552 =7,565

Rousey, Inc., had a cash flow to creditors of $16,560 and a cash flow to stockholders of $6,992 over the past year. The company also had net fixed assets of $49,480 at the beginning of the year and $56,860 at the end of the year. Additionally, the company had a depreciation expense of $12,036 and an operating cash flow of $50,533. What was the change in net working capital during the year?

136 + 474 =610 610/( 1 − .38) =984 984 + 568 =1,552

Smashed Pumpkins Co. paid $136 in dividends and $568 in interest over the past year. The company increased retained earnings by $474 and had accounts payable of $594. Sales for the year were $16,265 and depreciation was $720. The tax rate was 38 percent. What was the company's EBIT?

540 (ending net fixed assets) + 32 (Depreciation) - 466 (beginning net fixed assets)=106

Teddy's Pillows had beginning net fixed assets of $466 and ending net fixed assets of $540. Assets valued at $314 were sold during the year. Depreciation was $32. What is the amount of net capital spending?

110,000-3,600,000+3,300,000= -190,000

The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $3.3 million, and the 2018 balance sheet showed long-term debt of $3.6 million. The 2018 income statement showed an interest expense of $110,000. What was the firm's cash flow to creditors during 2018?

13,800 − 5,800 − 1,100=6,900 6,900 − 700=6,200 .23(6,200)=1,426 6,900 + 1,100 − 1,426=6,574

Webster World has sales of $13,800, costs of $5,800, depreciation expense of $1,100, and interest expense of $700. What is the operating cash flow if the tax rate is 23 percent?

−1,356 − (−$2,662)=1,306 −382 + 1,611=1,229 4,267 − 1,306 − 1,229=1,732

Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?