Question #4 (30 marks) Consider the following financial statements about DANIEL Co. for the current year 2015 I/S for the year ended Dec. 31, 2015 Sales $1,255,250 CGS (712,000) GM 543,250 Expenses: Salaries $252,100 Other expenses 8,150 Depreciation 25,000 Interest 75,000 360,250 Earnings before taxes 183,000 Income tax _(43,000) Net Income $ 140,000 Comparative B/S for December 2015 and 2014 2015 2014 Balance sheets Assets Current assets Cash A/R Inv Prepaid Expenses 7,000 $ 43,250 70,000 210,000 $ 20,000 50,000 250,000 9,000 600,000 Noncurrent assets Plant assests 510,000 Less:Acc. Dep (125,000) (150,000) Totals $ 782,250 $ 712,000 Liabilities and Equity Current Liabilities A/P Salaries/P Interest/P $123,000 47,250 27,000 $115,000 72,000 25,000 70,000 Noncurrent Liabilities Bond/Payable 100,000 Equity Common Stock, $10 par 280,000 R/E 145,000 370,000 120,000 Additional information concerning Daniel's transactions during the year ended December 31, 2015: All sales during the year were made on account. All inventory was purchased on account, comprising the total accounts payable account Plant assets costing $90,000 were purchased by paying $40,000 in cash and by using 5,000 shares of stock. The other expenses are related to prepaid items. All income taxes incurred during the year were paid during the year In order to supplement its cash, Daniel issued 4,000 shares of common stock at par value. There were no penalties assessed for the retirement of bonds. Cash dividends of $?? were declared and paid at the end of the fiscal year. YOU ARE GOING TO PREPARE CASH FLOW STATEMENTS Required: a. Prepare CFO using the (i) DIRECT(6 marks) and (ii) INDIRECT(5 marks) methods b. Compute CFF(5 marks) and CFI (2 marks). c. Compute FCF using the adjustment formula FCF - CFOP-CFI". Hint; tax rate is 43/183 = 0.23497 (don't approximate) (6 marks) d. Compute FCF using the formula FCF - NOPAT - ANOA, excluding cash from operating assets. Hint; tax rate is 43/183 = 0.23497 (don't approximate) (6 marks) Question #4 (30 marks) Consider the following financial statements about DANIEL Co. for the current year 2015 I/S for the year ended Dec. 31, 2015 Sales $1,255,250 CGS (712,000) GM 543,250 Expenses: Salaries $252,100 Other expenses 8,150 Depreciation 25,000 Interest 75,000 360,250 Earnings before taxes 183,000 Income tax _(43,000) Net Income $ 140,000 Comparative B/S for December 2015 and 2014 2015 2014 Balance sheets Assets Current assets Cash A/R Inv Prepaid Expenses 7,000 $ 43,250 70,000 210,000 $ 20,000 50,000 250,000 9,000 600,000 Noncurrent assets Plant assests 510,000 Less:Acc. Dep (125,000) (150,000) Totals $ 782,250 $ 712,000 Liabilities and Equity Current Liabilities A/P Salaries/P Interest/P $123,000 47,250 27,000 $115,000 72,000 25,000 70,000 Noncurrent Liabilities Bond/Payable 100,000 Equity Common Stock, $10 par 280,000 R/E 145,000 370,000 120,000 Additional information concerning Daniel's transactions during the year ended December 31, 2015: All sales during the year were made on account. All inventory was purchased on account, comprising the total accounts payable account Plant assets costing $90,000 were purchased by paying $40,000 in cash and by using 5,000 shares of stock. The other expenses are related to prepaid items. All income taxes incurred during the year were paid during the year In order to supplement its cash, Daniel issued 4,000 shares of common stock at par value. There were no penalties assessed for the retirement of bonds. Cash dividends of $?? were declared and paid at the end of the fiscal year. YOU ARE GOING TO PREPARE CASH FLOW STATEMENTS Required: a. Prepare CFO using the (i) DIRECT(6 marks) and (ii) INDIRECT(5 marks) methods b. Compute CFF(5 marks) and CFI (2 marks). c. Compute FCF using the adjustment formula FCF - CFOP-CFI". Hint; tax rate is 43/183 = 0.23497 (don't approximate) (6 marks) d. Compute FCF using the formula FCF - NOPAT - ANOA, excluding cash from operating assets. Hint; tax rate is 43/183 = 0.23497 (don't approximate) (6 marks)
