THIS IS ALL THE INFORMATION GIVEN TO DETERMINE THE SOLUTIONS: The following are
ID: 2552090 • Letter: T
Question
THIS IS ALL THE INFORMATION GIVEN TO DETERMINE THE SOLUTIONS:
The following are two years of income statements and balance sheets for the Munich Exports Corporation.
MUNICH EXPORTS CORPORATION
BALANCE SHEET
2009
2010
Cash
$ 50,000
$ 50,000
Accounts Receivable
200,000
300,000
Inventories
450,000
570,000
Total Current Assets
700,000
920,000
Fixed Assets, net
300,000
380,000
Total Assets
1,000,000
1,300,000
Accounts Payable
130,000
180,000
Accruals
50,000
70,000
Bank Loan
90,000
90,000
Total Current Liabilities
270,000
340,000
Long-Term Debt
400,000
550,000
Common Stock ($0.05 par)
50,000
50,000
Additional Paid-In-Capital
200,000
200,000
Retained Earnings
80,000
160,000
Total Liabilities and Equity
1,000,000
1,300,000
Income Statement
Net Sales
1,300,000
1,600,000
Cost of Goods Sold
780,000
960,000
Gross Profit
520,000
640,000
Marketing
130,000
160,000
General and Administrative
150,000
150,000
Depreciation
40,000
55,000
EBIT
200,000
275,000
Interest
45,000
55,000
Earnings Before Taxes
155,000
220,000
Income Taxes (40% Rate)
62,000
88,000
Net Income
93,000
132,000
NEED THE SOULTIONS FOR:
a. Calculate the cash build, cash burn, and net cash burn or build for Munich Exports in 2010
b. Assume that 2011 will be a repeat of 2010. If your answer in Part A resulted in a net cash burn position, calculate the net cash burn monthly rate and indicate the number of months remaining “until out of cash.” If you answer in Part A resulted in a net cash build position, calculate the net cash build monthly rate and indicate the expected cash balance at the end of 2011.
MUNICH EXPORTS CORPORATION
BALANCE SHEET
2009
2010
Cash
$ 50,000
$ 50,000
Accounts Receivable
200,000
300,000
Inventories
450,000
570,000
Total Current Assets
700,000
920,000
Fixed Assets, net
300,000
380,000
Total Assets
1,000,000
1,300,000
Accounts Payable
130,000
180,000
Accruals
50,000
70,000
Bank Loan
90,000
90,000
Total Current Liabilities
270,000
340,000
Long-Term Debt
400,000
550,000
Common Stock ($0.05 par)
50,000
50,000
Additional Paid-In-Capital
200,000
200,000
Retained Earnings
80,000
160,000
Total Liabilities and Equity
1,000,000
1,300,000
Income Statement
Net Sales
1,300,000
1,600,000
Cost of Goods Sold
780,000
960,000
Gross Profit
520,000
640,000
Marketing
130,000
160,000
General and Administrative
150,000
150,000
Depreciation
40,000
55,000
EBIT
200,000
275,000
Interest
45,000
55,000
Earnings Before Taxes
155,000
220,000
Income Taxes (40% Rate)
62,000
88,000
Net Income
93,000
132,000
Explanation / Answer
cash build 2009 2010 2011 sales 1600000 1600000 1600000 Increase in Recv 200000 300000 -100000 0 Net Cash Build 1500000 1600000 Cash Burn Cost of Goods Sold 960000 960000 960000 Marketing 160000 160000 160000 General and Administrative 150000 150000 150000 Interest 55000 55000 55000 Income Taxes (40% Rate) 88000 88000 88000 cash burn from income statement 1413000 1413000 Increase in Inventory 450000 570000 120000 Accounts Payable 130000 180000 -50000 Accruals 50000 70000 -20000 Fixed Assets, net 300000 380000 80000 depriciation 55000 55000 Total Cash Burn 1598000 1413000 Net Cash Burn -98000 187000 Monthly Rate - 8,166.67 Months to Out of cash 50000/8166.67 6.12 Months if 2011 assumed to be same performance and assuming same balance sheet then There will be increase in cash by 187000 which can be derived by simply as follows 2011 Net profit 132000 Add Depriciation 55000 Assuming Same Net Cash will be added 187000 Opening Balance of Cash 50000 Closing Balance 237000
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