CORP FIN FINAL PT B A firm’s balance sheet contains $3,200 of cash, $20,000 of f
ID: 1174625 • Letter: C
Question
CORP FIN FINAL PT B
A firm’s balance sheet contains $3,200 of cash, $20,000 of fixed assets, $13,800 of accounts receivable, $7,200 of accounts payable, $5,000 of inventory, and $11,000 on a revolving line of credit. Assuming that list contains all of the company’s assets and liabilities:
11. How much are current assets? (Show calculation)
12. What is the company’s quick ratio? (Show calculation)
13. What is the company’s book value? (Show calculation)
A company began the year with retained earnings of $14,000. Net income for the year was $10,250, it repaid $4,500 of its line of credit balance, and it paid dividends to its shareholders of $11,000. What was the company’s retained earnings at the end of the year? (Show calculation)
PLEASE SHOW YOUR WORK NO SCREEN SHOTS OR IMAGES OF RESPONSE. PLEASE TYPE YOUR ANSWER OR UPLOAD DOCUMENT IF REQUIREMENTS MENTIONED ABOVE ARE NOT MET I WILL GIVE A NEGATIVE RATING
Explanation / Answer
11.
Current assets = Cash + Accounts receivable + Inventory
= 3,200 + 13,800 + 5,000
= $22,000
12.
Quick assets = Cash + Accounts receivable
= 3,200 + 13,800
= $17,000
Current liabilities = Accounts payable + Revolving line of credit
= 7,200 + 11,000
= $18,200
Quick ratio = Quick assets/Current liabilities
= 17,000/18,200
= 0.93:1
13.
Assets of the company = Current assets + Fixed assets
= 22,000 + 20,000
= $42,000
Book value of company = Assets - Liabilities
= 42,000 - 18,200
= $23,800
Calculation of retained earnings at the end of the year
Retained earnings at the end of the year = Retained earnings at the begining of the year + Net income - Dividend paid
= 14,000 + 10,250 - 11,000
= $13,250