Section III. Case Problems For the following case problems, show all your work:

Question

Section III. Case Problems

For the following case problems, show all your work: factors, formulas, diagrams, etc. No credit will be given for answers without your showing all the steps you've taken to arrive at your solutions. To compute your work, you may use tvm tables, excel, or financial calculators- your choice.

Case Problem 1: Create and submit an income statement and a balance sheet for Hitchcock Productions. Then, answer the questions that follow. Assume a 30% tax rate for Hitchcock.

Cash...512 Depreciation...85 Cost of Goods Sold...128 Accounts Receivable...700 Sales...689 Interest Paid on Bonds...86 Long-term Debt...847 Net Plant & Equipment...1776 Inventory...301 Accounts Payable...540 Dividends Paid...57 Notes Payable...144

9. What is Hitchcock's net income ?

10. What is Hitchcock's Owners' Equity ?

11. What is Hitchcock's Operating Cash Flow ?

12. What is the quick ratio for Hitchcock ?

13. What is Hitchcock's profit margin ?

Explanation / Answer

9. net income= 689-128-85-86= $390 10.Owners' Equity= 301+1776+512+700-847-540-144-57= $1701 11.Operating Cash Flow= 390-(30%x390)+85+86= $444 12.quick ratio= (C.A- inventories)/CL =(512+700+301-301)/(144+540)= 1.772 13.profit margin = PAT/sales = 273/689= 39.623%

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