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A11 A G NOTES & ASSUMPTIONS 1 The tax rate is 40 % 2 Cash dividend of $2,600k declared & paid 3 Part of the long-term debt was retired on Dec 31: Interest is based on previous year balance 4 LT Interest Rate 5% Additional short-term debt was taken on Dec 31 Interest is based on previous year balance 6 ST Interest Rate 10% 7 During the year, $700k of common stock was issued in exchange for PP&E 8 No PP&E was sold during the year 9 10 11 Strawman Corporation 12 Income Statement 13 For year ended 12/31/... 14 ALL FIGURES IN $000s 2017 2016 NOTES 15 16 Revenue 69,000.0 17 COGS (Cost of Goods Sold) 47,000.0 18 Gross profit 19 SG&A (Selling, General & Administrative) 9,300.0 20 Operating income Other revenues & gains 21 22 Gain on sale of investments 800.0 23 EBIT (Earnings before interest and taxes) 24 Interest expense, net 950.0 25 Earnings before taxes 26 Income tax expense 27 Net income 28 Strawman Student Template 115% A11 A E G C 27 Net income 28 29 Strawman Corporation 30 Balance Sheet 31 As of 12/31/... 32 ALL FIGURES IN $000s NOTES 2016 2017 33 from statement of cash flows 34 Cash 11,500.0 35 Receivables 13,000.0 17,500.0 36 Inventory 20,500.0 17,500.0 37 Total current assets 38 PP&E, gross 17,000.0 19,000.0 (11,700.0) (12,000.0) 39 Accumulated depreciation 13,000.0 40 Long-term investments (held-to-maturity) 14,200,0 41 Total Assets 42 43 44 Accounts payable 9,000.0 12,000.0 45 Short-term note 2,000.0 2,500,0 46 Accrued liabilities 2,000,0 2,500.0 47 Total current liabilities 48 Long-term debt 49 Preferred stock 15,000.0 14,000.0 19,000.0 50 Common stock 17,000.0 51 Retained earnings 19,000.0 52 Total Liabilities+ Shareholders' Equity check for imbalance 53 54 Strawman Student Template 115% X Al1 A F G O Strawman Corporation 55 Statement of Cash Flows 56 For year ended 12/31/... 57 ALL FIGURES IN $000s 2016 2017 NOTES 58 59 Cash flows from operations (DIRECT) revenue increase in recelvables 60 Cash collections from customers 61 LESS 62 Cash paid for merchandise COGS increase in inventory -increase in payables SG&A depreciation-increase in accruals 63 Cash paid for SG&A 64 Cash paid for interest 65 Cash paid for income taxes 66 Net cash provided (used) by operating activities 67 68 Cash flows from operations (INDIRECT) 69 Net income starting line 70 Adjustments to reconcile net income to net cash provided by operating activities non-cash, add back 71 Depreciation 72 Gain on sale of investments non-operating, subtract if gain 73 Change in inventory decrease source 74 Change in receivables increase use 75 Change in accounts payable increase source 76 Change in accrued liabilities decrease use 77 Net cash provided (used) by operating activities 78 79 80 Cash flows from investing activities Sale of held-to-maturity investments sale source 81 purchase use 82 Purchase of olant assets Strawman Student Template + + 115 % A11 A O RRHINS 82 Purchase of plant assets purchase use 83 Net cash provided (used) by investing activities 84 85 86 Cash flows from financing activities 87 Issuance of capital stock issuance source 88 Proceeds from (repayment of) long-term debt repayment use 89 Proceeds from (repayment of) short-term debt proceeds source 90 Payment of cash dividends to preferred stock (2,600.0) use Payment of cash dividends to common stock 91 92 Net cash provided (used) by financing activities 93 94 Net increase in cash 95 Cash, beginning of year 96 Cash, end of year feeds the balance sheet cash figure 97 98 Noncash investing and financing activities 99 Issuance of common stock for PP&E 700.0 100 375 376 377 378 379 380 381 382 Strawman Student Template 115% A11 A G NOTES & ASSUMPTIONS 1 The tax rate is 40 % 2 Cash dividend of $2,600k declared & paid 3 Part of the long-term debt was retired on Dec 31: Interest is based on previous year balance 4 LT Interest Rate 5% Additional short-term debt was taken on Dec 31 Interest is based on previous year balance 6 ST Interest Rate 10% 7 During the year, $700k of common stock was issued in exchange for PP&E 8 No PP&E was sold during the year 9 10 11 Strawman Corporation 12 Income Statement 13 For year ended 12/31/... 14 ALL FIGURES IN $000s 2017 2016 NOTES 15 16 Revenue 69,000.0 17 COGS (Cost of Goods Sold) 47,000.0 18 Gross profit 19 SG&A (Selling, General & Administrative) 9,300.0 20 Operating income Other revenues & gains 21 22 Gain on sale of investments 800.0 23 EBIT (Earnings before interest and taxes) 24 Interest expense, net 950.0 25 Earnings before taxes 26 Income tax expense 27 Net income 28 Strawman Student Template 115% A11 A E G C 27 Net income 28 29 Strawman Corporation 30 Balance Sheet 31 As of 12/31/... 32 ALL FIGURES IN $000s NOTES 2016 2017 33 from statement of cash flows 34 Cash 11,500.0 35 Receivables 13,000.0 17,500.0 36 Inventory 20,500.0 17,500.0 37 Total current assets 38 PP&E, gross 17,000.0 19,000.0 (11,700.0) (12,000.0) 39 Accumulated depreciation 13,000.0 40 Long-term investments (held-to-maturity) 14,200,0 41 Total Assets 42 43 44 Accounts payable 9,000.0 12,000.0 45 Short-term note 2,000.0 2,500,0 46 Accrued liabilities 2,000,0 2,500.0 47 Total current liabilities 48 Long-term debt 49 Preferred stock 15,000.0 14,000.0 19,000.0 50 Common stock 17,000.0 51 Retained earnings 19,000.0 52 Total Liabilities+ Shareholders' Equity check for imbalance 53 54 Strawman Student Template 115% X Al1 A F G O Strawman Corporation 55 Statement of Cash Flows 56 For year ended 12/31/... 57 ALL FIGURES IN $000s 2016 2017 NOTES 58 59 Cash flows from operations (DIRECT) revenue increase in recelvables 60 Cash collections from customers 61 LESS 62 Cash paid for merchandise COGS increase in inventory -increase in payables SG&A depreciation-increase in accruals 63 Cash paid for SG&A 64 Cash paid for interest 65 Cash paid for income taxes 66 Net cash provided (used) by operating activities 67 68 Cash flows from operations (INDIRECT) 69 Net income starting line 70 Adjustments to reconcile net income to net cash provided by operating activities non-cash, add back 71 Depreciation 72 Gain on sale of investments non-operating, subtract if gain 73 Change in inventory decrease source 74 Change in receivables increase use 75 Change in accounts payable increase source 76 Change in accrued liabilities decrease use 77 Net cash provided (used) by operating activities 78 79 80 Cash flows from investing activities Sale of held-to-maturity investments sale source 81 purchase use 82 Purchase of olant assets Strawman Student Template + + 115 % A11 A O RRHINS 82 Purchase of plant assets purchase use 83 Net cash provided (used) by investing activities 84 85 86 Cash flows from financing activities 87 Issuance of capital stock issuance source 88 Proceeds from (repayment of) long-term debt repayment use 89 Proceeds from (repayment of) short-term debt proceeds source 90 Payment of cash dividends to preferred stock (2,600.0) use Payment of cash dividends to common stock 91 92 Net cash provided (used) by financing activities 93 94 Net increase in cash 95 Cash, beginning of year 96 Cash, end of year feeds the balance sheet cash figure 97 98 Noncash investing and financing activities 99 Issuance of common stock for PP&E 700.0 100 375 376 377 378 379 380 381 382 Strawman Student Template 115%