It is January 2nd. Senior management of Baldwin meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 50,000 shares of stock plus a new bond issue. The CFO happily notes this will raise their Leverage (=assets/equity) to a new target of 2.7. Assume the stock can be issued at yesterdays stock price ($43.66). Which of the following statements are true? Check all that apply.
Select: 3
a. The Baldwin Working Capital will be unchanged at $15,569
b. Total Assets will rise to $236,616,000
c. The Baldwin bond issue will be $3,711,100
d. Long term debt will increase from $84,450,595 to $86,633,595
e. Baldwin will issue stock totaling $2,183,000
f. Total investment for Baldwin will be $5,894,100
Balance Sheet 2020 2021 Common Size 18.1% 6.3% 3.7% $38,895 $13,423 $7,888 $31.9081 $10,547 $1,358 S80, 184 28.196 $43,813 $225,160 ($70,826) 105.09 -33.0% $165,300 (S57,176) $154,334 71.996 $108,124 $214,518 100.0% $151,938 EFINITIONS: Common Size: The common JASSETS ize column simply represents each item as a ercentage of total assets for that year. Cash: our end-of-year cash position. Accounts Cash Ceceivable: Reflects the lag between delivery Accounts Receivable ind payment of your products. Inventories: The Inventory urrent value of your inventory across all roducts. A zero indicates your company Total Current Assets tocked out. Unmet demand would, of course, ell to your competitors. Plant & Equipment Plant & Equipment The current value of your plant. Accum Deprec: Accumulated Depreciation The total accumulated depreciation from your lant. Accts Payable: What the company Total Fixed Assets urrently owes suppliers for materials and ervices. Current Debt: The debt the company Total Assets obligated to pay during the next year of perations. It includes emergency loans used to LIABILITIES & OWNERS' eep your company solvent should you run out EQUITY #cash during the year. Long Term Debt: The company's long term debt is in the form of Accounts Payable onds, and this represents the total value of Current Debt our bonds. Common Stock: The amount of Long Term Debt capital invested by shareholders in the company. etained Earnings: The profits that the Total Liabilities ompany chose to keep instead of paying to hareholders as dividends. Common Stock Retained Earnings Total Equity Total Liab. &0. Equity $9,344 S35,271 $84,451 16.496 39.496 $6,200 $21,7161 $59,170 $129,068 60.296 S87,086 $35,749 $49,704 16.7% 23.2% $18,687 S46,185 $85,453 39.896 $84,852 $214,518 100.0% $151,938 Cash Flow Statement 2021 $3,518 S13,651 SO $3,144 ($6,508) ($2.876) 2020 $7,417 $9,887 SO S403 $5,008 (5793) $10.929 $21.9221 (559,880) ($40.900) he Cash Flow Statement examines what happened in the Cash Cash Flows from Operating Activities: ccount during the year. Cash injections appear as positive numbers and Net Income (Loss) esh withdrawals as negative numbers. The Cash Flow Statement is an Depreciation xcellent tool for diagnosing emergency loans. When negative cash Extraordinary gains/losses/writeoffs Ows exceed positives, you are forced to seek emergency funding. For Accounts Payable xample, if sales are bad and you find yourself carrying an abundance of Inventory xcess inventory, the report would show the increase in inventory as a Accounts Receivable uge negative cash flow. Too much unexpected inventory could outstrip Our inflows, exhaust your starting cash and force you to beg for money Net cash from operations keep your company afloat. Cash Flows from Investing Activities: Plant Improvements Cash Flow Summary Cash Flows from Financing Activities: Dividends Paid Baldwin Sales of Common Stock Purchase of Common Stock Cash from long term debt 40,000 Retirement of long term debt 20,000 Change in current debt (net) 0 Net cash from financing activities -20,000 Net change in cash position Closing cash position -40,000 -60,000 Operations Finance Chg. Cash Operations Investment Finance Chg. Cash SO $17,082 SO $36,580 ($11.300) $13,556 $ol $4,285 SO $17,808 $0 ($3.784) S55,918 $6.987 $38,895 $18,309 (5880) $31.9081 Balance Sheet 2020 2021 Common Size 18.1% 6.3% 3.7% $38,895 $13,423 $7,888 $31.9081 $10,547 $1,358 S80, 184 28.196 $43,813 $225,160 ($70,826) 105.09 -33.0% $165,300 (S57,176) $154,334 71.996 $108,124 $214,518 100.0% $151,938 EFINITIONS: Common Size: The common JASSETS ize column simply represents each item as a ercentage of total assets for that year. Cash: our end-of-year cash position. Accounts Cash Ceceivable: Reflects the lag between delivery Accounts Receivable ind payment of your products. Inventories: The Inventory urrent value of your inventory across all roducts. A zero indicates your company Total Current Assets tocked out. Unmet demand would, of course, ell to your competitors. Plant & Equipment Plant & Equipment The current value of your plant. Accum Deprec: Accumulated Depreciation The total accumulated depreciation from your lant. Accts Payable: What the company Total Fixed Assets urrently owes suppliers for materials and ervices. Current Debt: The debt the company Total Assets obligated to pay during the next year of perations. It includes emergency loans used to LIABILITIES & OWNERS' eep your company solvent should you run out EQUITY #cash during the year. Long Term Debt: The company's long term debt is in the form of Accounts Payable onds, and this represents the total value of Current Debt our bonds. Common Stock: The amount of Long Term Debt capital invested by shareholders in the company. etained Earnings: The profits that the Total Liabilities ompany chose to keep instead of paying to hareholders as dividends. Common Stock Retained Earnings Total Equity Total Liab. &0. Equity $9,344 S35,271 $84,451 16.496 39.496 $6,200 $21,7161 $59,170 $129,068 60.296 S87,086 $35,749 $49,704 16.7% 23.2% $18,687 S46,185 $85,453 39.896 $84,852 $214,518 100.0% $151,938 Cash Flow Statement 2021 $3,518 S13,651 SO $3,144 ($6,508) ($2.876) 2020 $7,417 $9,887 SO S403 $5,008 (5793) $10.929 $21.9221 (559,880) ($40.900) he Cash Flow Statement examines what happened in the Cash Cash Flows from Operating Activities: ccount during the year. Cash injections appear as positive numbers and Net Income (Loss) esh withdrawals as negative numbers. The Cash Flow Statement is an Depreciation xcellent tool for diagnosing emergency loans. When negative cash Extraordinary gains/losses/writeoffs Ows exceed positives, you are forced to seek emergency funding. For Accounts Payable xample, if sales are bad and you find yourself carrying an abundance of Inventory xcess inventory, the report would show the increase in inventory as a Accounts Receivable uge negative cash flow. Too much unexpected inventory could outstrip Our inflows, exhaust your starting cash and force you to beg for money Net cash from operations keep your company afloat. Cash Flows from Investing Activities: Plant Improvements Cash Flow Summary Cash Flows from Financing Activities: Dividends Paid Baldwin Sales of Common Stock Purchase of Common Stock Cash from long term debt 40,000 Retirement of long term debt 20,000 Change in current debt (net) 0 Net cash from financing activities -20,000 Net change in cash position Closing cash position -40,000 -60,000 Operations Finance Chg. Cash Operations Investment Finance Chg. Cash SO $17,082 SO $36,580 ($11.300) $13,556 $ol $4,285 SO $17,808 $0 ($3.784) S55,918 $6.987 $38,895 $18,309 (5880) $31.9081
