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FREE CASH FLOW: Bailey’s Corporation’s financial statements (dollars and shares

ID: 2662157 • Letter: F

Question

FREE CASH FLOW: Bailey’s Corporation’s financial statements (dollars and shares are in millions) are provided here.

Balance Sheets as of December 31

                                                                                                                                                           2008        2007

Assets                                                                                                                                                                                                                $14,000   $13,000

Cash and equivalents                                  30,000     25,000

Inventories                                                  28,125    21,000

      Total   Current Assets                          $72,125   $59,000

Net plant and equipment                              50,000    47,000

Total assets                                             $122,125 $106,000

  

Liabilities and Equity

Accounts payable                                        $10,800     $9,000

Notes payable                                                 6,700        5,150

Accruals                                                          7,600       6,000

     Total current liabilities                             $25,100   $20,150   

Long-term bonds                                          15,000     15,000

Retained earnings                                           32,052       20,850

     Common equity                                        $82,025     $70,850

Total liabilities and equity                              $122,125 $106,000

Income Statement for Year Ending December 31, 2008

Sales                                                                           $214,000

Opera

Explanation / Answer

Networking Capital (NWC) for 2007: NWC2007 = Current Assets2007 - CurrentLiabilities2007NWC2007 = $59,000 -20,150 NWC2007 = $38,850 Networking Capital (NWC) for 2008: NWC2008 = Current Assets2008 - CurrentLiabilities2008NWC2008 = $72,125 -25,100 NWC2008 = $47,025