Cost of Goods Sold Other operating expenses Depreciation Expense Interest Expens
ID: 2709697 • Letter: C
Question
Cost of Goods Sold
Other operating expenses
Depreciation Expense
Interest Expense
Current Assets
Total Fixed Assets
Accumulated Depreciation
This can be determined from the information given
Current Liabilities
Long-term Debt
Common Stock
A company has the financial data above for years 2013 and 2014. The company’s average tax rate is 35% and the company’s plowback ratio is .65.
A) Construct the 2014 Income Statement.
B) Construct the 2013 and 2014 Balance Sheets.
C) Find Operating Cash Flow.
D) Find Net Capital Spending
E) Find the change in Net Working Capital.
F) Find Cash Flow to Creditors.
G) Find Cash Flow to Shareholders.
H) Find Free Cash Flow.
I) If you happen to know for a fact that this company sold fixed assets for $6,000 over the year, how much in fixed assets must they have purchased?
J) If you happen to know for a fact that this company repurchased $2,000 in shares of stock over the year, how much must they have issued in new stock?
2013 2014 Sales $2100Cost of Goods Sold
$1200Other operating expenses
$200Depreciation Expense
$225Interest Expense
$175Current Assets
$1000 $1300Total Fixed Assets
$3500 $4000Accumulated Depreciation
$1250This can be determined from the information given
Current Liabilities
$900 $975Long-term Debt
$1500 $1350Common Stock
$400 $923.25Explanation / Answer
Ans a Income Statement Year 2014 Details Amt $ Sales 2100 less Cost of Goods sold 1200 Gross profit 900 Less Other operating expenses 200 less Depreciation expense 225 EBIT 475 Less: Interest 175 EBT 300 Less Income Tax @35% 105 Net Profit 195 Profit Appropriation : dividend 68.25 Retained earning transfer 126.75 Ans b BS as on end of Year 2013 Amt $ BS as on end of Year 2014 Amt $ Current Assets 1,000 Current Assets 1,300 Total Current Assets 1,000 Total Current Assets 1,300 Non Current Assets Non Current Assets Fixed Asset 3,500 Fixed Asset 4,000 Accumulated depreciation equipment -1250 Accumulated depreciation equipment -1475 Total Non current Assets 2,250 Total Non current Assets 2,525 Total Assets 3,250 Total Assets 3,825 Liabilities & Equities Liabilities & Equities Current Liabilities 900 Current Liabilities 975 Total Current Liabilities 900 Total Current Liabilities 975 Non Current Liabilities Non Current Liabilities Long term Loan 1,500 Long term Loan 1,350 Total Non Current Liabilities 1,500 Total Non Current Liabilities 1,350 Equities 400 Equities 923.25 Retained earning 450 Retained earning 576.75 Total Liabilities & Equities 3,250 Total Liabilities & Equities 3,825 Ans c Operating Cash Flow Year 2014 Amt $ Net income 195 Add Depreciation 225 Less Increase in current Asset -300 Add Increase in Current Liab 75 Total cash flow from Opearting activities 195 Ans D. Net Capital spending = $(2525-2250)= $275 Ans e Net working capital= current Asset-Current Liab year 2013 year 2014 So Net working capital $ 100.00 $ 325.00 Ans f Cash Flow to creditors=Cost of goods sold-increase in current liability = $ 1,125.00 Ans g Cash Flow to shareholders = dividend paid = $ 68.25 Ans h Free cash flow=Opearting cash flow- capital invstement = $ (80.00) Ans i If company sold capital asset for $6000 , the purchase of fixed asset is = $ 6,275.00 Ans j If company repurchase stock of $2000 , then it issued new stocks of $2,523.75