Balance Sheet Exercise: Given the information below for tema, Inc., a) construct a balance sheet, b) calculate the company's capital structure (percentage of equity and percentage of debt), c) determine the company's debt ratio, d) determine the company's net working capital. As a percent of assets, what are the firm's largest investments and sources of financing? Gross foxed assets $75,000 Accounts receivable $ 50,000 Cash $10,000 Long-term bank note $ 5.000 Other assets $15.000 Mortgage $ 20,000 Accounts payable $40,000 Common stock $100,000 Retained earnings $15,000 Inventories $ 70,000 Hint: Start by determining which category each item belongs in: current asset, long term asset, current liability, long term liability, or shareholder equity. Then follow the correct order: Accumulated depreciation $20,000 Short-term notes $ 20,000 + Assets Liabilities & Shareholder Equity 1) Current 2) Long term 3) Total 4) Shareholder equity added 21 @ MacBook PSC OOD DOO 80 F3 F1 F2 F4 F5 76 # $ % A 1 2 3 1 5 11) Calculate the company's capital structure (percentage of equity and percentage of debt). Which is greater: equity or debt? (the two percentages should sum to 100%) a) To solve for Percentage of Equity: use formula Total Shareholder fauity([Liabilities + Shareholder Equity) b) To solve for Percentage of Debt: use formula Total Liabilities/flabilities + Shareholder Equity) 12) Determine the company's net working capital (use formula: Current Assets-Current Liabilities). 13) Is it positive or negative? How might you interpret this? IV. Statement of Cash Flows - Questions 1. The statement of Cash Flows is commonly thought of as the financial statement that "reconciles" the accrual-based accounting required by GAAP, with the cash flow and outflow of the company. Because of the matching principle that is a central tenant of GAAP, a company's net income can fail to indicate whether a company has enough cash to stay in business over the next period. The statement of cash flow is designed to help clarify the company's cash position The Statement of CF Includes three categories of activities that helps us understand how a company has spent its cash over 21 MacBook esc 80 F3 888 F1 F2 F4 F5 $ 1 2 # 3 % 5 4 6 Q W E R S n L