[19 points in total; 12, 3 and 4 points] Referring to the following GPC Corporat
ID: 2567740 • Letter: #
Question
[19 points in total; 12, 3 and 4 points] Referring to the following GPC Corporation’s financial statements answer the questions below:
TABLE 1: Balance Sheet of GPC Corporation as of December 31, 2016 and 2015
ASSETS
2015
2016
Current Assets
Cash and Marketable Securities
100
120
Receivables
50
60
Inventories
150
180
Total Current Assets
300
360
Property, Plant, and Equipment (PP&E)
400
490
Less: Accumulated depreciation
100
130
Net PP&E
300
360
Total Assets
600
720
LIABILITIES AND STOCKHOLDERS'S EQUITY
Current Liabilities
Accounts Payable
60
72
Short-term debt
90
184.6
Total Current Liabilities
150
256.6
Long-term debt (8% interest bonds maturing in 20x7)
150
150
Stockholders' equity (1 million shares outstanding)
300
313.4
Paid-in capital
200
200
Retained earnings
100
113.4
Total Liabilities and Equity
600
720
All figures are in millions of U.S. dollars
TABLE 2: Income Statement of GPC Corporation for 2016
Sales revenue
200
Cost of goods sold
-110
Gross margin
90
General, Selling, and Administrative expenses
-30
Operating Income
60
Interest expenses
-21
Taxable income
39
Income tax (40%)
-15.6
Net Income (= Net Profits or Earnings after tax)
23.4
Allocation of net income:
Dividends
10
Change in retained earnings
13.4
All figures are in millions of U.S. dollars.
————————————————————————————————————————————
Construct GPC Corporation’s Statement of Cash Flows for 2016. Clearly show the three major cash flow categories and how each was obtained. (Use Excel spreadsheet and follow the format in the notes.)
TABLE 1: Balance Sheet of GPC Corporation as of December 31, 2016 and 2015
ASSETS
2015
2016
Current Assets
Cash and Marketable Securities
100
120
Receivables
50
60
Inventories
150
180
Total Current Assets
300
360
Property, Plant, and Equipment (PP&E)
400
490
Less: Accumulated depreciation
100
130
Net PP&E
300
360
Total Assets
600
720
LIABILITIES AND STOCKHOLDERS'S EQUITY
Current Liabilities
Accounts Payable
60
72
Short-term debt
90
184.6
Total Current Liabilities
150
256.6
Long-term debt (8% interest bonds maturing in 20x7)
150
150
Stockholders' equity (1 million shares outstanding)
300
313.4
Paid-in capital
200
200
Retained earnings
100
113.4
Total Liabilities and Equity
600
720
All figures are in millions of U.S. dollars
TABLE 2: Income Statement of GPC Corporation for 2016
Sales revenue
200
Cost of goods sold
-110
Gross margin
90
General, Selling, and Administrative expenses
-30
Operating Income
60
Interest expenses
-21
Taxable income
39
Income tax (40%)
-15.6
Net Income (= Net Profits or Earnings after tax)
23.4
Allocation of net income:
Dividends
10
Change in retained earnings
13.4
All figures are in millions of U.S. dollars.
————————————————————————————————————————————
Explanation / Answer
GPC Corporation Cash Flow Statement For the Year Ended 2016 $ million $ million Cash flow from Operating activities: Net Income 23.4 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 30 Increase in Accounts receivable -10 Increase in Inventory -30 Increase in Accounts payable 12 2 Net cash provided by operating activities 25.4 Investing activities: Purchase of property, plant, and equipment -90 Net cash used by investing activities -90 Financing activities: Short-term debt 94.6 Dividends paid -10 Net cash provided by financing activities 84.6 Net increase in cash 20 Beginning cash and cash equivalents balance 100 Ending cash and cash equivalents balance 120
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