12) The December 31, 2001, balance sheet of Venus’s Tennis Shop, Inc., showed cu
ID: 2813319 • Letter: 1
Question
12) The December 31, 2001, balance sheet of Venus’s Tennis Shop, Inc., showed current assets of $1,200 and current liabilities of $720. The December 31, 2002, balance sheet showed current assets of $1,440 and current liabilities of $525. What was the company’s 2002 change in net working capital, or NWC? 13) Given the following info the Soprano Pizza Co., calculate the depreciation expense: sales = $21,000; costs = $10,000; addition to retained earnings = $4,000; dividends paid = $800; interest expense = $1,200; tax rate = 35%. 14) From the following balance sheet accounts, a) Construct a balance sheet for 2013 and 2014 b) List all the working capital accounts c) Find the net working capital for the years ending 2013 and 2014 d) Calculate the change in net working capital for the year 2014 Account Balance 12/31/2013 Balance 12/31/2014 Accounts payable $1000 $1100 Accounts receivable $2480 $2690 Cash $1300 $1090 Common stock $4990 $4990 Inventory $5800 $6030 Long-term debt $7800 $8200 Notes payable $ 800 $ 960 Plant, property, and equipment $6380 $6530 Retained earnings $1370 $1090 15) From the following income statement accounts, produce the income statement for the year. Account Balance Cost of goods sold $345000 Interest expense $82000 Taxes $2000 Revenue $744000 Selling, general, and administrative expense $66000 Depreciation $112000 16) Fill in the missing information on the annual Balance Sheets State for Barron Pizza Inc. Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2012 ASSETS Cash $7,071 $9,499 $17,609 Accts. Receivables $26,767 $25,877 Inventory $16,341 $12,659 Other Current $11,590 $10,955 Total Current $62,458 $57,433 $65,131 Long Term Invest. $19,102 $20,998 Net PP&E $203,818 $223,599 Goodwill $48,756 $48,274 Other Assets $13,259 $13,817 $14,091 TOTAL ASSETS $347,214 $365,469 $387,439 LIABILITIES Accounts Payable $74,467 $66,209 Short Term Debt $250 $225 Current Liab. $80,917 $74,702 Long Term Debt $61,000 $185,085 Other Liab. $28,970 $20,288 TOTAL LIAB. $187,942 $243,522 Owner’s Equity Common Stock $102,421 $102,107 Retained Earnings $39,371 $13,525 Total OE TOTAL LIAB & OE $347,214 $365,469 17) The income statement begins with revenue and subtracts various operating expenses until arriving at __________. a) Earnings after taxes b) Net income c) Taxable income d) Earnings before interest and taxes (EBIT) 18) Cash and equivalents are $1561; short-term investments are $1052; accounts receivable are $3616; accounts payable are $5173; short-term debt is $288; inventories are $1816; other current liabilities are $1401; and other current assets are $707. What is the amount of total current liabilities? a) $8752 b) $6974 c) $6862 d) $6574 19) With regard to the cash flow statement, assume that we want to break down Yahoo! Finance’s cost of revenue into its two major components: cost of goods sold and depreciation. To do so, we would need to look at _________ for the depreciation amount. a) The statement of cash flow b) Both the income statement and the statement of cash flow c) Both the balance sheet and the statement of cash flow d) The income statement 20) . Which of the following is/are false regarding the balance sheet and income statement? I. The income statement reflects a summary of activity that occurs over some period of time while the balance sheet is a snapshot taken at a single point in time. II. Both represent a summary of activity that occurs over some time period. III. The two statements, taken together, give an accurate estimate of the firm’s cash flows and market value. a) I only b) II only c) III only d) II and III only 21) A firm with negative net working capital . a) has no cash on hand b) MUST sell some of its inventory to correct the problem c) has more current liabilities than current assets d) all of the above III. Financial Ratio Analysis 22) Below is the balance sheet information on two companies. Prepare a common-size balance sheet for each company. Review each company's percentage of total assets. Are these companies operating with similar philosophies or in similar industries? What appears to be the major difference in financing for these two companies? Account Balance Sheet Company 1 Balance. Sheet Company 2 Current Assets Cash $5,377 $299 Investments $4,146 $354 Accts. Rec. $8,100 $221 Inventory $5,372 $494 Total Current $22,995 $1,368 Long Inv. $84 $307 PP&E $9,846 $1,471 Goodwill $5,390 $69 Intangible $6,149 $27 Other $3,799 $86 Total Assets $48,263 $3,328 Liabilities Accts. Pay. $12,309 $661 Short –Term D $1,139 $0 Other Short Lia $0 $122 Current. Liab. $13,448 $783 Long-Term D $2,955 $4 Other Liab. $4,991 $54 Total Liab. $21,394 $841 Owner’s Equity Common Stock $3,120 $1,026 Treasury Stock ($6,754) $0 Retained Earn. $30,503 $1,461 Total Equity $26,869 $2,487 Total Liab. &Equity $48,263 $3,328 23) Prepare common-size income statements for Wal-Mart and Starbucks using the January 2014 information for Walmart and your new pro forma September 2013 information for Starbucks provided in Problems 5 and 6.Which company is doing a better job of getting sales dollars to net income? Where is the one company having an advantage over the other company in turning revenue into net income? Wal-Mart Starbucks Account Jan. 31, 2013 Sep. 30, 2013 Sales $476,294 $14,892 COGS $358,069 $6,382 SG&A $91,763 $5,929 EBIT $26,462 $2,581 Interest $2,335 $28 Taxes $8,105 $945 Net Income $16,022 $1,608 24) SDJ, Inc., has net working capital of $1,050, current liabilities of $4,300, and inventory of $1,300. What is the current ratio? What is the quick ratio? 25) Music Row, Inc. has sales of $32 million, total assets of $43 million, and total debt of $9 million. If the profit margin is 7%, what is net income? What is ROA? What is ROE? 26) Bethesda Co. had additions to retained earnings for the year just ended of $275,000. The firm paid out $150,000 in cash dividends, and it has ending total equity of $6 million. If Bethesda currently has 125,000 shares of common stock outstanding, what are earnings per share? Dividends per share? Book value per share? If the stock currently sells for $95 per share, what is the market to book ratio? The price earnings ratio? 27) Find the following financial ratios for Smolira Golf Corp. Short-term solvency ratios a. Current ratio b. Quick ratio c. Cash ratio Asset turnover ratios d. Total asset turnover e. Inventory turnover f. Receivables turnover Long-term solvency ratios g. Total debt ratio h. Equity multiplier i. Times interest earned ratio j. Cash coverage ratio Profitability ratios k. Profit margin l. Return on assets m. Return on equity Smolira Golf Corp Balance Sheets as of December 31,2001 and 2002 2001 2002 2001 2002 Assets Liabilities & Equity Current assets Current liabilities Cash $650 $710 Accounts payable $987 $1,215 Acc. receivable $2,382 $2,106 Notes payable $640 $718 Inventory $4,408 $4,982 Other $90 $230 Total $7,440 $7,798 Total $1,717 $2,163 Long-term debt $4,318 $4,190 Fixed assets Owners' Equity Net Plant & equipment $13,992 $18,584 Common stock $10,000 $10,000 Retained earnings $5,397 $10,029 Total $15,397 $20,029 Total assets $21,432 $26,382 Total $21,432 $26,382 Smolira Golf Corp 2002 Income Statement Sales $28,000 Cost of goods sold $11,600 Depreciation $2,140 Earnings before interest and taxes $14,260 Interest paid $980 Taxable income $13,280 Taxes (35%) $4,648 Net Income $8,632 Dividends $4,000 Addition to retained earnings $4,632 28) For the following firms, find the return on equity using the three components of the DuPont identity: operating efficiency, as measured by the profit margin (net income/sales); asset management efficiency, as measured by asset turnover (sales/total assets); and financial leverage, as measured by the equity multiplier (total assets/total equity). 29) Which of the following is a correct interpretation of a total asset turnover of 3.0? a) For each $1 of sales generated by the firm it requires $3 in assets. b) For each $1 of assets owned by the firm it generates $3 in sales. c) For each $3 of sales, the firm makes $1 in net profit after taxes. d) The firm completely replenishes its available assets 3 times per year. 30) Which of the following is NOT a component of the Du Pont identity? a) Asset use efficiency b) Financial leverage c) Profitability d) All of the above are component of the Du Pont identity. 31) Last year, ABC and XYZ both had the same level of cost of goods sold, but ABC turned its inventory over 8 times during the year while XYZ turned its inventory over every 55 days. If the objective is to keep inventory as low as possible on average, which of the following is true? a) ABC did a better job since its inventory turnover was higher. b) XYZ did a better job since its days sales in inventory was lower. c) ABC did a better job since its days sales in inventory was higher. d) XYZ did a better job since its inventory turnover was lower. 32) If the total assets of a firm increase while all other components of ROE remain unchanged, you would expect the firm’s: a) ROE to increase. b) ROE to remain unchanged. c) ROA to increase. d) Equity multiplier to decrease. 33) If a firm sells inventory for cash, then the current ratio will always: a) Increase. b) Decrease. c) Remain the same. d) Increase or decrease, but cannot ever remain the same.
Explanation / Answer
Solution :-12 Net Working Capital Year Current Assets Current Liabilities (CA - CL) 2001 1200 720 480 2002 1440 525 915 Change in Net working capital (915 - 480) 435 Increment of 435 Solution 13:- Sales 21000 Less :- Operating cost 10000 Less :- Dep 2415 (sales - OC - EBIT) EBIT 8585 Less :- Interest 1200 EBT 7385 EAT/(1-0.35) Less :- Tax 2585 EAT 4800 (Dividend +RE) Dividend 800 Retained Earnings 4000 Solution 17 :- The income statement begins with revenue and subtracts various operating expenses until arriving at EBIT The answer is (d) Solution 18:- Accounts Payable 5173 Short term debt 288 other CL 1401 Total Current Liabilities 6862 Therefore the correct answer is © Solution :- 19 The answer is (D) The income statement Solution :- 20 The correct answer is 3rd that is (III only) Solution 21 The correct answer is © A firm with negative net working capital has more current liabilities than current assets As per chegg policy 4 question are required to answer in case of many question and in the data to balance sheet and income statement some figure missed. Feel free to ask any query your satisfaction is very valuable And no time left for further questions that why sorry
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