Question #4

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)

GM543,250

Expenses:

Salaries$252,100

Other expenses8,150

Depreciation25,000

Interest75,000

360,250

Earnings before taxes183,000

Income tax(43,000)

Net Income$ 140,000

Comparative B/S for December 2015 and 2014

Balance sheets

Assets20152014

Current assets

Cash$ 43,250$20,000

A/R 70,00050,000

Inv210,000250,000

Prepaid Expenses 9,0007,000

Noncurrent assets

Plant assests 600,000 510,000

Less:Acc. Dep(150,000) (125,000)

Totals$ 782,250$ 712,000

Liabilities and Equity

Current Liabilities

A/P$123,000$115,000

Salaries/P47,25072,000

Interest/P27,00025,000

Noncurrent Liabilities

Bond/Payable 70,000 100,000

Equity

Common Stock, $10 par 370,000 280,000

R/E 145,000 120,000

Totals$ 782,250$ 712,000

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 and (ii)INDIRECT methods

b.ComputeCFF and CFI .

c.Compute FCF using the adjustment formula . Hint; tax rate is 43/183 = 0.23497 (don't approximate)

d.Compute FCF using the formula , excluding cash from operating assets. Hint; tax rate is 43/183 = 0.23497 (don't approximate)