question 3

Refer to the following financial statements for Crosby Corporation: L. Prepare a statement of cash flows for the Crosby Corporation using the general procedures indicated in Table 2-10. Describe the general relationship between net income and net cash flows from operating activities for the firm. 3- Has the buildup in plant and equipment been financed in a satisfactory manner? Briefly discuss. 4- Compute the book value per common share for both 20X1 and 20X2 for the Crosby Corporation. 5- If the market value of a share of common stock is 3.3 times book value for 20X1, what is the firm's P/E ratio for 20X2? Preferred stock dividends Earnings available to common stockholders Shares outstanding 10,000150,000120,0001.25 Statement of retained Earnings For the year Ended December 31, 20X2 \begin{tabular}{lr} \hline Retained earnings, balance, January 1, 20X2 & 500,000 \\ Add: Earnings available to common stockholders, 20X2 & 150,000 \\ Deduct: Cash dividends declared and paid in 20X2 & 50,000 \\ \cline { 2 - 2 } Retained earnings, balance, December 31, 20X2 & 600,000 \\ \hline \end{tabular} Comparative balance Sheets For 201 and 202 Year-End201Year-End202 Assets Current assets: Cash70,000100,000 Accountsreceivable(net)300,000350,000 Inventory 410,000430,000 Prepaid expenses Total current assets Investments PPE \begin{tabular}{cc} 50,000 & 30,000 \\ \hline 830,000 & 910,000 \\ \hline 80,000 & 70,000 \end{tabular} Less: accumulated depreciation Net PPE Total assets \begin{tabular}{rr} 2,000,000 & 2,400,000 \\ 1,000,000 & 1,150,000 \\ 1,000,000 & 1,250,000 \\ \hline 1,910,000 & 2,230,000 \end{tabular} Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Notes payable \begin{tabular}{rr} \hline 1,910,000 & 2,230,000 \\ \hline \end{tabular} Accrued expenses Total current liabilities Long-term liabilities: Bonds payable, 20X2 Total liabilities \begin{tabular}{cc} 250,000 & 440,000 \\ 400,000 & 400,000 \\ 70,000 & 50,000 \\ \hline 720,000 & 890,000 \\ \hline & \\ 70,000 & 120,000 \\ \hline 790,000 & 1,010,000 \\ \hline \end{tabular} 8 Stockholders' Equity: \begin{tabular}{lcc} Preferred stock, \$100 Par value & 90,000 & 90,000 \\ Common stock, \$1 Par value & 120,000 & 120,000 \\ Capital paid in excess of par & 410,000 & 410,000 \\ Retained earnings & 500,000 & 600,000 \\ Total Stockholders' Equity & 1,120,000 & 1,220,000 \\ Total liabilities and Stockholders' Equity & 1,910,000 & 2,230,000 \\ \hline \end{tabular}