What appropriate impact did the change in Marshs holding period have on the companys 20Y2 financing need?
- A decrease of about $57,900
- A decrease of about $45,000
- An increase of about $45,000
- An increase of about $57,900
Marsh Ltd The following case information includes: Part A Statements of financial position Statements of comprehensive income Notes to financial statements Marsh Ltd Statements of Financial Position (in 9000s) As At December 31: 2012 2011 $ $ ASSETS Current assets Cash Marketable securities Accounts receivable Inventory Prepaid expenses Other current assets Total current assets 2 17 226 300 18 27 590 10 13 170 240 16 15 464 Fixed assets Plant and equipment Less: Depreciation Net fixed assets 160 80 140 70 70 Other noncurrent assets 2. 2 Intangibles 10 12 TOTAL ASSETS $ 682 $ 548 $ $ LIABILITIES AND EQUITY Current liabilities Short-term debt Current portion-LTD Accounts payable Accrued expenses Taxes payable Total current liabilities 10 7 120 20 8 165 0 D 110 18 18 146 Long-term debt 21 Deferred taxes 2 1 Equity Share capital Retained camins Total equity 184 314 ** 281 401 TOTAL LIABILITIES AND EQUITY 3 682 The notes that follow are an integral part of these tinancial statements. Marsh Ltd Statements of Comprehensive Income (in $000s) Years Ended December 31: 20Y2 2011 $ $ Sales Cost of goods sold Gross profit 2.200 1,700 500 2.050 1.600 450 Operating expenses Accounting Depreciation Insurance Office supplies Provision for doubtful accounts Rent Salaries and wages Selling and marketing Delivery Heat, light, and power Amortization of patent rights Total operating expenses 10 9 14 18 20 11 10 16 19 24 15 280 30 20 12 2 439 220 22 18 11 358 Net operating profit Other income (expenses) Loss on sale of investments (20) 1..... ..... Income before taxes Taxation Net Income Marsh Ltd Part A Notes to Financial Statements Note 1 Sales are recognized at time of delivery and are shown net of 20Y2 sales returns totaling $10,000. Note 2 Marketable securities are shown at market value. Note 3 Intangibles, including patents and copyrights, are amortized over a period of 10 years, corresponding to their useful life. Note 4 Inventory is shown at the lower of cost or market applied on a first-in, first-out basis (FIFO). Note 5 Accounts receivable are shown net of an allowance for uncollectible accounts of $15,000 in 20Y1 and $20,000 in 20Y2. Note 6 Other current assets consist of loans to employees of the company. These loans are to be repaid in 2043 Note 7 Short-term debt the amount shown is repayable on demand. Note 8 Long-term debt consists of equipment loans for the purchase of new conveyor lines. Principal is payable over four years as follows: 2013 $7,000 2014 $7.000 2095 $7,000 2016 $7,000 Note 9 Deferred tax: Provision is made for deferred tax resulting from depreciation differences between book and tax accounting. Depreciation is calculated using straight line or declining balance methods where appropriate
