Ch 03- End-of-Chapter Problems - Financial Statements, Cash Flow, and Taxes Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. Round your answers to the nearest whole number, if necessary. a. What was net operating working capital for 2020 and 2021? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes. 2020$ million 2021$ million b. What was Arlington's 2021 free cash flow? $ million c. Construct Arlington's 2021 statement of stockholders' equity. Statement of Stockholders' Equity, 2021 Common Stock Retained Total Stockholders' Shares Amount Earnings Equity Balances, 12/31/20 million $ million $ million $ million S 2021 Net Income million Cash Dividends million access Tips Addition to retained earnings million Balances, 12/31/21 million $ million $ million $ million ccess Tips d. What was Arlington's 2021 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent. $ million e. What was Arlington's MVA at year-end 2021? Assume that its stock price at December 31, 2021 was $25. Round your answer to the nearest cent. $ million N OUTAttempts 0 Average 0 / 2 12. Problem 3.12 (Statement of Cash Flows) eBook Hampton Industries had $73,000 in cash at year-end 2020 and $13,000 in cash at year-end 2021. The firm invested in property, plant, and equipment totaling $140,000 - the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$110,000. Round your answers to the nearest dollar, if necessary. a. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign. $ b. If accruals increased by $40,000, receivables and inventories increased by $175,000, and depreciation and amortization totaled $35,000, what was the firm's net income? $E Il PRSI a e e v N = _ &' CENGAGE | MINDTAP Q. Search this course 0 X Ch 03- End-of-Chapter Problems - Financial Statements, Cash Flow, and Taxes Attempts | | Average / 3 18. Problem 3.18 (Personal Taxes) l-'] Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information: = She received $88,000 in salary. She received $16,500 of dividend income. = She received $7,900 of interest income on Home Depot bonds. = She received $22,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $10,000. = She received $14,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $6,200. Mary only has allowable itemized deductions of $6,200, so she will take the standard deduction of $12,400. The standard deduction is subtracted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. a. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent. $ Buccess Tips b. What is her marginal tax rate? Do not round intermediate calculationsy Round your answer to one decimal place. 13 p % c. What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places. % Save & Continue Back to Assignment Attempts| 0 l l Average 0/ 1 11. Problem 3.11 (EVA) For 2021, Gourmet Kitchen Products reported $23 million of sales and $18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 8% and its federal-plus-state income tax rate was 25%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2021? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary. $5 Ch 03- End-of-Chapter Problems - Financial Statements, Cash Flow, and Taxes 0 X Income Statement for Year Ending December 31, 2021 Sales $239,000 Operating costs excluding depreciation and amortization 190,000 EBITDA $ 49,000 Depreciation & amortization 5,000 EBIT $ 44,000 Interest 8,550 EBT $ 35,450 Taxes (25%) 8,862.50 Net income $26,587.50 Dividends paid $12,662.50 Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. Round your answers to the nearest whole number, if necessary. o a. What was net operating working capital for 2020 and 2021? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes. 2020% million jccess Tips 2021$% : million k b. What was Arlington's 2021 free cash flow? $ [ | million . Construct Arlington's 2021 statement of stockholders' equity. Statement of Stockholders' Equity, 2021 Common Stock Retained Total Stockholders Shares Amount Earnings Equity (\Wo Uk Balances, 12/31/20 million $ million $ million $ million 2021 Net Income million Cash Dividends : G million Addition to retained earnings million Balances, 12/31/21 | million $ | million $ | million $ | | million ROFILE Study Tools College Success Tips Career Success Tips Help Arngron Lorporation's rinancial statements (dollars and shares are in millions) are provided here. Balance Sheets as of December 31 2021 2020 Assets Cash and equivalents $ 15,000 $ 13,000 Accounts receivable 35,000 30,000 Inventories 31,925 27,000 Total current assets m m Net plant and equipment 51,000 46,000 Total assets $132,925 $116,000 Liabilities and Equity Accounts payable $ 10,200 $ 9,000 Accruals 7,200 6,000 Notes payable 6,100 5,500 Total current liabilities $ 23,500 $ 20,500 Long-term bonds 2,000 20,000 Total liabilities $ 43,500 $ 40,500 Common stock (4,000 shares) 40,000 40,000 Retained earnings 49,425 35,500 Common equity $ 89,425 $ 75,500 Total liabilities and equity $132,925 $116,000 Income Statement for Year Ending December 31, 2021 Sales $239,000 Operating costs excluding depreciation and amortization 190,000 EBITDA $ 49,000 Depreciation & amortization 5,000 EBIT $ 44,000 Interest 8,550 eBook Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 ( millions of dollars) 2021 2020 Sales $2,600.0 $2,000.0 Operating costs excluding depreciation and amortization 2,210.0 1,700.0 ES EBITDA $ 390.0 $ 300.0 Depreciation and amortization 57.0 52.0 Earnings before interest and taxes (EBIT) $ 333.0 $ 248.0 Interest 57.2 44.0 Earnings before taxes (EBT) $ 275.8 $ 204.0 Tools Taxes (25%) 110.3 81.6 Net income $ 16575 $ 122.4 Common dividends $ 149.0 $ 97.9 Success Tips Powell Panther Corporation: Balance Sheets as of December 31 (millions of dollars) Success Tips 2021 2020 Assets Cash and equivalents $ 26.0 $ 22.0 Accounts receivable 336.0 280.0 Inventories 528.0 440.0 Total current assets $ 890.0 $ 742.0 Net plant and equipment 572.0 520.0 SIGN OUT Total assets $1,462.0 $1,262.0 Liabilities and Equity Accounts payable $ 220.0 $ 200.0 Accruals 216.0 180.0 Notes navable 52 40 0#' CENGAGE | MINDTAP Notes payable Total current liabilities Long-term bonds Total liabilities Common stock Retained earnings Common equity Total liabilities and equity 2020: $ dy Tools RO llege Success Tips $ hreer Success Tips lp II1. The large increase in sales from 2020 to 2021 explains the large increase in 2021 dividends. [-select-v] - SIGN OUT Ch 03- End-of-Chapter Problems - Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign. a. What was net operating working capital for 2020 and 2021? Assume the firm has no excess cash. b. What was the 2021 free cash flow? c. How would you explain the large increase in 2021 dividends? 1. The large increase in net income from 2020 to 2021 explains the large increase in 2021 dividends. II. The large increase in EBIT from 2020 to 2021 explains the large increase in 2021 dividends. 1V. The large increase in retained earnings from 2020 to 2021 explains the large increase in 2021 dividends. V. The large increase in free cash flow from 2020 to 2021 explains the large increase in 2021 dividends. Q Search this course Financial Statements, Cash Flow, and Taxes 0 X 52.0 40.0 $ 488.0 $ 420.0 520.0 400.0 $1,008.0 $ 820.0 400.7 405.2 53.3 36.8 $ 454.0 $ 442.0 $1,462.0 $1,262.0 Edmonds Industries is forecasting the following income statement: Sales $9,000,000 Operating costs excluding depreciation & amortization 4,950,000 EBITDA $4,050,000 Depreciation and amortization 900,000 EBIT R $3,150,000 Interest 720,000 EBT $2,430,000 Taxes (25%) 607,500 Net income $1,822,500 The CEO would like to see higher sales and a forecasted net income of $3,590,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales that depreciation and amortization and interest expenses will increase by 11%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $3,590,000 in net income? Round your answer to the nearest dollar, $ | if necessary. Study Tools College Success Tips Career Success Tips Help (SRS [e1\Rellhs * & CENGAGE | MINDTAP Q Search this cours Ch 03- End-of-Chapter Problems - Financial Statements, Cash Flow, and Taxes 0o ! Earnings before taxes (EBT) $ 275.8 $ 204.0 Taxes (25%) 110.3 81.6 Net income $ 165.50 / 122(4 Common dividends $ 149.0 $ 979 Powell Panther Corporation: Balance Sheets as of December 31 (millions of dollars) 2021 2020 Assets Cash and equivalents $ '26.0 $RE2200) Accounts receivable 336.0 280.0 Inventories 528.0 440.0 Total current assets $ 890.0 $ 742.0 Net plant and equipment 572.0 520.0 Total assets $1,462.0 $1,262.0 Liabilities and Equity Accounts payable $ 220.0 $ 200.0 Accruals 216.0 A 180.0 Notes payable 52.0 40.0 Total current liabilities $ 488.0 $ 420.0 Long-term bonds 520.0 400.0 Total liabilities $1,008.0 $ 820.0 Common stock 400.7 405.2 Retained earnings 53.3 36.8 Common equity $ 454.0 $ 442.0 Total liabilities and equity $1,462.0 $1,262.0 Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, should be indicated by a minus sign. if necessary. Negative values, if any, a. What was net operating working capital for 2020 and 20217 Assume the firm has no excess cash. 2020: $ Back to Assignment Attempts 0 Average 0 / 1 13. Problem 3.13 (Statement of Cash Flows) eBook You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So your first job will be to recreate the firm's cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. It earned $5 million in net income during the year but paid $900,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.6 million of property, plant, and equipment - the majority having a useful life of more than 20 years and falling under the alternative depreciation system. You have just spoken to the firm's accountants and learned that annual depreciation expense for the year is $440,000. The purchase price for the property, plant, and equipment represents additions before depreciation. Finally, you have determined that the only financing done by the firm was to issue long-term debt of $1 million at a 7% interest rate. What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary. ccess Tips $ ccess Tips Grade it Now Save & Continue Continue without saving I OUT