Question
1. Company ABC has sales of $1,850,000, cost of goods sold of $1,000,000, EBIT of $350,000, interest expense of $65,000, and a tax rate of
1. Company ABC has sales of $1,850,000, cost of goods sold of $1,000,000, EBIT of $350,000, interest expense of $65,000, and a tax rate of 27%. If the company paid $51,000 in dividends what is the addition to retained earnings.
2. Nitro Enterprise had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a combined book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending?
3. Use the Income Statement and Balance Sheet below to calculate the companies free cash flow.
Income Statement | 2017 |
Net Sales | 675 |
Cost of goods sold | 210 |
Depreciation | 50 |
EBIT | 415 |
Interest Paid | 15 |
EBT | 400 |
Taxes (30%) | 120 |
Net Income | 280 |
Dividends | 105 |
Addition to Retained Earnings | 175 |
Assets | 2016 | 2017 | Liabilities and Shareholders equity | 2016 | 2017 |
Current Assets |
|
| Current Liabilities |
|
|
Cash | 100 | 125 | Accounts Payable | 200 | 250 |
Accounts Receivable | 250 | 350 | Notes Payable | 150 | 225 |
Inventory | 400 | 375 |
|
|
|
Total Current Assets | 750 | 850 | Total Current Liabilities | 350 | 475 |
|
|
| Long term debt | 300 | 250 |
Fixed Assets |
|
| Stockholders equity |
|
|
PPE | 1500 | 1700 | Common stock | 300 | 300 |
Accumulated Depreciation | 400 | 450 | Retained earnings | 900 | 1075 |
Net PPE | 1100 | 1250 | Total Shareholders Equity | 1200 | 1375 |
Total Assets | 1850 | 2100 | Total Liabilities & Equity | 1850 | 2100 |
4. A firm has net working capital of $700. Long-term debt is $5,000, total assets are $7,800, and fixed assets are $3,850. What is the amount of the total liabilities?
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