28. Refer to the following financial statements for Crosby Corporation:

Prepare a statement of cash flows for the Crosby Corporation using the general procedures indicated in Table 2-10.

Describe the general relationship between net income and net cash flows from operating activities for the firm.

C.

Has the buildup in plant and equipment been financed in a satisfactory manner? Briefly discuss.

Compute the book value per common share for both 20X1 and 20X2 for the Crosby Corporation.

(LO2-4)

Part 2 Financial Analysis and Plannino

If the market value of a share of common stock is 3.3 times book value for

20X1, what is the firm's P/E ratio for 20X2?

CROSBY CORPORATION

Income Statement

For the Year Ended December 31, 20X2

Sales annama

Cost of goods sold.

Gross profit

Selling and administrative expenst

Depreciation expense

Operating income...

Interest expense..........

Earnings before taxes

Taxes .......

carnings after taxes

Preferred stock dividends ........

PArDIDOS AVA laDle ocommon StOCKOOGArs

Shares outstanding

$2.200,000

1,300,000

900.000

420,000

150,000

$ 330,000

90,000

240.000

80,000

160,000

10,000

150.000

120,000

1.25

Statement of Retained Earnings

For the Year Ended December 31, 20%2

Retained eamings, balance, January 1, 20%2.

Add: Earnings available to common stockholders, 20X2....

Deduct: Cash dividends declared and paid in 20X2 ........

Retained eaminas. balance. December 31. 20X2 ..

Comparative Balance Sheets

For 20X1 and 20X2

3500,000

150,000

50,000

Assets

Current assets:

Cash....

Accounts receivable (net)...

inventory.........

Prepaid expenses...

Total current assets

Investments (long-term securities)

Less: Accumulated depreciation...

Net plant and equipment.

Yoar-end

20X1

70.000

300,000

410,000

50,000

$ 830,000

80.000

2.000,000

1.000.000

$1,000,000

$1,910,000

Year-End

100.000

350,000

430,000

30,000

910.000

70,000

2.400,000

1.150.000

$1,250,000

$2.230,000 (continued)

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable@..wa..aaaaaaaaaaaaaaasonasoonas.ovo...o....an.....a..

Notes payable....

Accrued expenses....

Total current liabilities.

Long-term liabilities:

Bonds payable, 20X2..

Total liabilities.....

Stockholders' equity:

Preferred stock, $100 par value.

Common stock, $1 par value.

Capital paid in excess of par

Retained earnings.........

Total stockholders' equity.

Total liabilities and stockholdere equity.......................

Chapter 2 Review of Accounting

250.000

400,000

70.000

$ 720,000

70.000

$ 790,000

$ 440,000

400.000

50.000

$ 890,000

120,000

$1.010.000

$ 90,000

90,000

120.000

120,000

410.000

410,000

500.000

600.000

Retained earnings, balance, December 31, 20%2........................

$500,000

150,000

50.000

$600,000

Comparative Balance Sheets

For 20X1 and 20X2

Year-End

20X1

Year-End

20X2

Assets

Current assets:

Cash..................

Accounts receivable (net)........

Inventory......

Prepaid expenses.......

Total current assets...

Investments (long-term securities).

Plant and equioment..................

Less: Accumulated depreciation

Net plant and equipment.............

Total assets.......

70.000

300,000

410.000

50.000

$ 830,000

80.000

2.000.000

1,000,000

$1.000.000

$1.910.000

100,000

350.000

430.000

30.000

910.000

70.000

2.400.000

1.150.000

$1.250,000

$2.230.000