Please answer all 3 questions in attachment in at least 400 words or more
3-6. (Cash flow analysis) Interpret the following information regarding Maness Corporation's statement of cash flows. Net income Depreciation expense Profits before depreciation Increase in accounts receivables Increase in inventories Increase in accounts payables Increase in accrued expenses Cash flow from operations $ $ 370 60 430 (300) (400) 200 40 (30) Investment activity Change in fixed assets $ (1,500) Financing activity Increase in short-term notes $ Repayment of long-term debt Repurchase common stock Common stock dividends Total financing activities $ Change in cash $ Beginning cash Ending cash $ 100 (250) (125) (75) (350) (1,880) 3,750 1,870 3-7. (Interpreting financial statements and measuring cash flows) Given the information below for Pamplin Inc.: a. How much is the firm's net working capital and what is the debt ratio? b. Complete a common-sized income statement, a common-sized balance sheet, and a statement of cash flows for 2010. Interpret your results. 3-10. (Corporate income tax) The William B. Waugh Corporation is a regional Toyota dealer. The firm sells new and used trucks and is actively involved in the parts business. During the most recent year, the company generated sales of $3 million. The combined cost of goods sold and the operating expenses were $2.1 million. Also, $400,000 in interest expense was paid during the year. Calculate the corporation's tax liability. Question 1 Maness Corporation's statement of cash flows Cash from Operations - Although, Maness Corporation's Net Income is positive, its Cash flow from Operations is negative. The major reasons are: Increase in account receivables ($300) indicating that the company sold majority of their products as Credit Sales. A negative implication might be that some of these Credit Sales could turn into bad debt affecting the future cash flows of the company. Increase in Inventory ($400). This might result in higher inventory positions that the company might not able to sell their inventory affecting their Sales in the future. However, to partially offset these reductions in the Operating Cash Flow, the Account Payables increased by $200 thereby increasing the cash flow. Cash From Investing - Cash from Investing is negative as the Company made huge additional investments in Fixed Assets probably to increase capacity and thereby increase sales. Cash From Financing - Cash from Financing is negative as the Company repaid portion of its debt and also paid dividend to its equity holders. The company did not issue longterm debt or equity to finance its investments. Since the Investments are neither funded by Operations (negative cash flow) nor Financing (negative cash flow), the company used internal financing (cash on hand) to fund its Investment and operating activities that resulted in a major reduction on the Company's cash balance (3,750 to 1,870). Question 2 In Progress Question 3 William B. Waugh Corporation Income Statement Sales 3,000,000 Cost of Goods Sold + Operating Expenses (2,100,000) Earnings Before Interest and Taxes Interest Expenses 900,000 (400,000) Taxable Income 500,000 Calculating Tax Liability 15% for the First $50,000 7,500 25% for the Next $25,000 6,250 34% for the Remaining $425,000 144,500 Total Tax Liability of William B. Waugh Corporation 158,250
