Please show all work. 1. Statement of Cash Flows and Standardized Financial Statements a) Net income for your firm was $10,000 last year. The depreciation expense was $2,500; accounts receivable increased $1,250; accounts payable increased $800; and inventories increased by $2,000. Identify the sources and uses of cash What was the total cash flow from operations for the period? Operating activities = Net Income + Depreciation + Source (inflow) - Use foutflow) b) i) Prepare the 2018 common-size Income Statement given: U.S. CORPORATION 2018 Income Statement ($ in millions) Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable income Taxes (21%) Net Income $1,509 750 65 $ 694 70 $ 624 131 $ 493 Dividends Addition to retained earnings $123 370 Income Statement Assets Liabilities and Equity Common-size Common-Base Year Common-Base Year Sales Cost of Goods Sold Cash A/P A/R Notes Payable Depreciation EBIT Inventory Long term debt Taxable income Net Fixed Assets Common Stock Interest Taxes Total Assets Ret Earnings Total Liabilities and Equity Net Income b) ii) Prepare the 2018 (base year=2017) common-base year Balance Sheet given: U.S. CORPORATION 2017 and 2018 Balance Sheets ($ in millions) Labuities and owners' Equity 2018 2017 Assets 2017 2018 $ 104 455 553 $1,112 Current liabilities Accounts payable Notes payable Total $ 221 688 555 $1,464 Current assets Cash Accounts receivable Inventory Total Fixed assets Net plant and equipment $ 232 196 $ 428 $ 266 123 $ 389 2. Ratio Analysis a) Use the Balance Sheet and Income Statement information to calculate the following ratios in 2018: Liquidity Ratios . current ratio, cash ratio, quick ratio, Interval measure and Networking capital to total assets Long-term solvency, or financial leverage ratios Total debt ratio, Debt-equity ratio, equity multiplier, Long-term debt ratio, Times interest earned ratio and cash coverage ratio Asset management, or turnover, ratios Inventory turnover, days' sales inventory, receivables turnover, days' sales in receivable, net working capital turnover, net fixed asset turnover and total asset turnover Profitability ratios Profit margin, Return on assets, Return on Equity Market value ratios (Market Price per share = $10, Number of Shares Outstanding = 100m) Price-Earnings ratio, Market-to-book ratio, enterprise value, EBITDA ratio Long-term debt $ 408 $ 454 $1.644 $1.709 Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity 600 1.320 $1,920 640 1,690 $2,330 Total assets $2,756 $3,173 $2,756 $3,173 U.S. CORPORATION 2017 and 2018 Balance Sheets ($ in millions) Labattles and Owners' Equity 2018 2017 Assets 2017 2018 $ 104 455 553 $1.112 Current liabilities Accounts payable Notes payable Total $ 221 688 555 $1,464 Current assets Cash Accounts recolvable Inventory Total Fixed assets Net plant and equipment $ 232 196 $ 428 $ 266 123 $ 389 Long-term debt $ 408 $ 454 3. DuPont Identity a) Use the Balance Sheet and Income Statement information to calculate ROE in 2018 using the DuPont Identity: U.S. CORPORATION 2017 and 2018 Balance Sheets ($ in millions) Assets Liabilities and Owners' Equity 2017 2018 2017 2018 Current assets Current liabilities Cash $ 104 $ 221 Accounts payable $ 232 $ 266 Accounts receivable 455 688 Notes payable 196 123 Inventory 553 555 Total $ 428 $ 389 Total $1,112 $1,464 Foxed assets Net plant and Long-term debt $ 408 $ 454 equipment $1,644 $1,709 Owners' equity Common stock and paid-in surplus 600 640 Retained earnings 1,320 1,690 Total $1,920 $2,330 Total liabilities and Total assets $2,756 $3,173 owners' equity $2,756 $3,173 $1,644 $1,709 Owners' equity Common stock and paid-in surplus Retained earnings Total Total abilities and owners' equity 600 1.320 $1,920 640 1.690 $2,330 Total assets $2,756 $3,173 $2,756 $3,173 U.S. CORPORATION 2018 Income Statement ($ in milions Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable income Taxes (21%) Net income $1,509 750 65 $ 694 70 $ 624 131 $ 493 U.S. CORPORATION 2018 Income Statement $inm n millions) Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable income Taxes (21%) Net income $1,509 750 65 $ 694 70 $ 624 131 $ 493 Dividends Addition to retained earnings $123 370 Dividends Addition to retained earnings $123 370 Formulas: Total Asset Turnover Net working capital turnover = Sales/(Current assets - Current liabilities) Net fixed asset turnover =Sales/Net fixed assets Total asset turnover = Sales/Total assets Liquidity Ratios Current Ratio = Current assets/Current liabilities Quick Ratio = (Current assets - Inventory)/Current liabilities Cash Ratio = Cash/Current liabilities NWC to TA = (Current assets - Current liabilities)/Total assets Interval Measure = Current assets/Average daily operating costs Profitability Measures Profit margin = Net income / Sales Return on assets = Net income / Total assets Return on equity = Net income / Total equity Long-term Solvency Ratios Total debt ratio = (Total assets - Total equity)/Total assets Debt-equity ratio = (Total assets Total equity)/Total equity Equity multiplier = 1 +Debt-equity ratio Long-term debt ratio = Long-term debt/(Long-term debt + Total equity) Market Value Measures Earnings per share = Net income / Shares outstanding Price-carnings ratio = Price per share / Earnings per share Price-sales ratio = Price per share / Sales per share Market-to-book ratio=Market value per share / Book value per share Enterprise Value = Total market value of the stock + Book value of all liabilities - Cash EBITDA ratio = Enterprise value / EDITDA Coverage Ratios Times interest earned ratio = EBIT/Interest Cash coverage ratio = (EBIT + Depreciation)/Interest Inventory Ratios Inventory turnover = Cost of goods sold/Inventory Days' sales in inventory = 365 days/Inventory turnover DuPont Identity ROE = Profit Margin x Total Asset Turnover x Equity Multiplier Receivables Ratios Receivables turnover = Sales/Accounts receivable Days' sales in receivables (average collection period or days' sales outstanding) = 365 days/Receivables turnover