Introduction to Financial Management Homework 2 Problem 02-A (5 points) The following table presents the long-term liabilities and stockholders' equity of Information Control Corp. one year ago: During the past year, the company issued 5 million shares of new stock at a total price of $63 million, and issued $30 million in new long-term debt. The company generated $8 million in net income and paid $1.8 million in dividends. Construct the current balance sheet reflecting the changes that occurred at the company during the year. (Just show the Liability & Equity side) Long-term debt Preferred stock Common stock ($1 par value) Accumulated retained earnings Capital surplus $55.000.000 3,100,000 12.000.000 119,000,000 56,000,000 Problem 02-B (15 points) Consider the following abbreviated financial statements for Weston Enterprises: a. What is owners' equity for 2014 and 2015? b. What is the change in net working capital for 2015? c. In 2015, Weston Enterprises purchased $2,350 in new fixed assets. How much in fixed assets did Weston Enterprises sell? What is the cash flow from assets for the year? (The tax rate is 40 percent.) d. During 2015, Weston Enterprises raised $455 in new long-term debt. How much long-term debt must Weston Enterprises have paid off during the year? What is the cash flow to creditors ? Weston Enterprises 2015 and 2014 Partial Balance Sheets Assets Liabilities and Owners' Equity 2015 2014 2015 Current assets $1,176 $984 Current liabilities $445 Net fixed assets 5.104 4.384 Long-term debt 2.713 2014 $401 2.380 Introduction to Financial Management Homework 2 Weston Enterprises 2015 Income Statement Sales $14.740 Costs 5.932 Depreciation 1.190 Interest paid 328 Problem 02-C (10 points) a. Calculate the firms operating cash flow (OCF) for the yr ended December 31, 06 b. Calculate the firm's free cash flow (FCF) for the yr ended December 31,06 Balance Sheet Assets Cach Marketable Securities Accounts receivable Inventories Total current assets Gross Fixed Assets Less: Accumulated Depreciation Net Fixed Assets Total Assets 2006 2005 $ 1.500.00 $ 1.000.00 $ 1,800.00 $ 1.200.00 $ 2,000.00 $ 1,800.00 $ 2,900.00 $ 2,800.00 'S 8200.00 $ 6,800.00 $29,500.00 $28,100.00 $14.700.00 $13,100.00 $14,800.00 $15,000.00 $23,000.00 $21,800.00 DELTA $ 500.00 $ 600.00 $ 200,00 $ 100.00 $ 1,400.00 $ 1.400.00 $ 1.600.00 $ (200.00) $ 1,200.00 Liabilities and Stockholders Equities 2006 Accounts Payable $ 1,600.00 Notes Payable $ 2.800.00 Accruals $ 200.00 Total Current Liabilities $ 4,600.00 2005 $ 1,500.00 $ 2.200.00 $ 300.00 $ 4,000.00 DELTA $ 100.00 $ 600.00 $ (100.00) $ 600.00 Long Term Debt Common Stock Retained Earnings Total Stockholders Equity $ 5,000.00 $ 5,000.00 $10,000.00 $10,000.00 $ 3.400.00 $ 2800.00 $13.400.00 $12.800.00 $ $ $ $ . . 600 00 600.00 Total Liabilities and stockholder Equ $23,000.00 $21,800.00 $ 1.200.00 Income Statement Data 2006 Depreciation expense $ 1.600.00 Earnings before interest and Taxes $ 2.700.00 Interest Expense $ 367.00 Net Profit After Taxes $ 1.400.00 Tax rate 40%