Given the information below for Knapp Inc.: a. How much is the firm's net working capital and what is the debt ratio? 4 b. Complete a common-sized income statement, a common-sized balance sheet, and a statement of cash flows for 2018. Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, 5 usually the Given Data section. 6 DATA 7 Knapp Inc. Balance Sheet: 8 Assets 2017 2018 $200 $150 450 425 625 le 550 $1,200 $2,200 1,000 $1,200 $2,400 $1,200 $2,600 1,200 $1,400 $2,600 IHR 17 9 Cash 10 Accounts receivable 11 Inventory 12 Current assets 13 Plant and equipment 14 Accumulated depreciation 15 Net plant and equipment 16 Total assets Liabilities and Owners' Equity 18 Accounts payable 19 Notes payable current (9%) 20 Current liabilities 21 Bonds 22 Owners' equity 23 Common stock 24 Retained earnings 25 Total owners' equity 26 Total liabilities and owners' equity $200 $150 150 0 $200 $300 Eb $600 $600 59 $900 $900 700 $1,600 $2,400 le le 800 $1,700 $2,600 10 bel lon 27 ROC D E A Z8 Anapp inc. Income Statement 29 2017 2018 $1,200 $1,450 850 700 $500 $600 $30 $40 220 250 200 240 30 Sales 31 Cost of goods sold 32 Gross profit 33 Selling, general, and administrative expenses 34 Depreciation 35 Operating income 36 Interest expense 37 Net income before taxes 38 Taxes (40%) 39 Net income before taxes $250 $360 50 64 $200 $296 80 118 $178 $120 40 41 SOLUTION 42 a. How much is the firm's networking capital and what is the debt ratio? 2017 44 Net working capital $1,000 45 Debt ratio 43 2018 $900 46 47 . Complete a common-sized income statement, a common-sized balance sheet, and a patement of cash flows for 2018. 48 Knapp Inc. Common-sized Income Statement for 2018 49 Sales 50 Cost of goods sold 51 Gross profit 52 Operating expenses 53 Depreciation expense 54 Operating income 55 Interest expense 56 Net income before taxes 57 Taxes (40%) 58 Net income 59 B 60 Knapp Inc. Common-sized Balance Sheet for 2018: 61 Assets 62 Cash 63 Accounts Receivable 64 Inventory 65 Current assets 66 Plant and equipment 67 Accumulated depreciation 68 Net plant and equipment 69 Total assets 70 Liabilities and Equity 71 Accounts payable 72 Notes payable current (9%) 73 Current liabilities 74 Bonds 75 Owners' equity 76 Common stock 77 Retained earnings 78 Total owners' equity 79 Total liabilities and owners' equity 80 81 Knapp Inc. Statement of Cash Flows for 2018: 82 Cash Flow from Operating Activities 83 Net Income 84 Depreciation expense' 85 Decrease in accounts receivable 86 Increase in inventory 87 Decrease in account payable 88 Net cash provided by operating activities 89 Cash Flow from Investing Activities 90 Increase in plant and equipment 91 Cash Flow from Financing Activities 92 Increase in notes payable 93 Dividends 94 Net cash provided by financing activities 95 Net decrease in cash 96 Beginning cash, January 1, 2018 97 Ending cash, December 31, 2018 98