Refer to the following financial statements for Crosby Corporation: Comparative
ID: 2730963 • Letter: R
Question
Refer to the following financial statements for Crosby Corporation:
Comparative Balance Sheets
For 2010 and 2011
Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with a minus sign.)
Cash flows from operating activities:
Adjustments to determine cash flow from operating activities:
Total adjustments
Net cash flows from operating activities
Cash flows from investing activities:
Net cash flows from investing activities
Cash flows from financing activities:
Net cash flows from financing activities
Net increase (decrease) in cash flows
Compute the book value per common share for both 2010 and 2011 for the Crosby Corporation. (Round your answers to 2 decimals places.)
If the market value of a share of common stock is 2.4 times book value for 2011, what is the firm’s P/E ratio for 2011? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Income Statement
For the Year Ended December 31, 2011 Sales $ 3,470,000 Cost of goods sold 2,230,000 Gross profit $ 1,240,000 Selling and administrative expense 678,000 Depreciation expense 298,000 Operating income $ 264,000 Interest expense 85,400 Earnings before taxes $ 178,600 Taxes 148,000 Earnings after taxes $ 30,600 Preferred stock dividends 10,000 Earnings available to common stockholders $ 20,600 Shares outstanding 150,000 Earnings per share $ .14
Explanation / Answer
Ans;
a.
Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with a minus sign.)
CROSBY CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities:
Net income
$ 30,600
Adjustments to determine cash flow from operating activities:
Add back depreciation
$
Increase in accounts receivable
Increase in inventory
Decrease in prepaid expenses
Increase in accounts payable
Decrease in accrued expenses
Total adjustments
549,600
Net cash flows from operating activities
$ 580,200
Cash flows from investing activities:
Decrease in investments
$
Increase in plant and equipment
Net cash flows from investing activities
-531,600
Cash flows from financing activities:
Increase in bonds payable
$
Preferred stock dividends paid
Common stock dividends paid
Net cash flows from financing activities
-133,000
Net increase (decrease) in cash flows
$ -84,400
b.
Compute the book value per common share for both 2010 and 2011 for the Crosby Corporation. (Round your answers to 2 decimals places.)
Book value
2010
$ 5.91
2011
$ 4.88
a.
Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with a minus sign.)