Use the following to answer questions 7-15: 1999 2000 Sales $2900 $3300 Cogs $20
ID: 2818799 • Letter: U
Question
Use the following to answer questions 7-15:
1999 2000
Sales $2900 $3300
Cogs $2030 $2310
Interest $410 $420
Dividends $56 $79
Depreciation $290 $330
Cash $250 $150
Receiviables $242 $412
Current liabilities $900 $1100
Inventory $1015 $900
Long Term Debt $3200 $3100
Net Fixed Assets $6000 $5700
Tax Rate 34% 34%
7. What are earnings before interest and taxes for 2000?
A) $112
B) $158
C) $580
D) $660
E) $780
8. What is net income for 2000?
A) $112
B) $158
C) $580
D) $660
E) $780
9. What is operating cash flow for 2000?
A) $ 248
B) $ 662
C) $ 908
D) $1.072
E) $1,375
10. What is net working capital for 2000?
A) $ 362
B) $ 473
C) $ 519
D) $ 607
E) $1,060
11. What is cash flow to stockholders for 2000?
A) $ 79
B) $189
C) $445
D) $524
E) $603
12. What is cash flow to creditors for 2000?
A) $100
B) $320
C) $420
D) $520
E) $720
13. What is net capital spending for 2000?
A) -$ 10
B) $ 30
C) $300
D) $530
E) $630
14. What is the change in net working capital during 2000?
A) -$245
B) -$125
C) $362
D) $607
E) $904
15. What is cash flow from assets for 2000?
A) $ 428
B) $ 540
C) $ 633
D) $ 923
E) $1,123
I already have the answers, I just want the formulas and the explanations for these problems. Thank you
Explanation / Answer
(7) EBIT= SALES - COGS - DEPRICIATION
=3300-2310-330
=660
(8). NET INCOME= PROFIT AFTER TAX
= EBIT -INTEREST - TAX
= 660-420= 240 *0.66
= 158.4
(9) OPERATING CASHFLOW = CHANGE IN REVENUE + NONCASH OR NON OPERATING EXPENSES + INCREASE IN LIABILITY - INCREASE IN ASSETS
= 400+330+10+23-170+200+115
=908
We add back non cash or non operating expense because by these transactions actual profit falls , for the accurate profit we have to add back . We minus increase in assets because by purchasing the assets there will be cash outflow and there is same reason for add of liability as inc. in liability leads to inc. in cash flow
(10) CURRENT ASSETS - CURRENT LIABILITIES = NET WORKING CAPITAL
CURRENT ASSETS=412 +900+150=1462
Current liability=1100
Net working capital =1462-1100=362
We have taken current liabilities and current assets because working capital is is recurring nature .
(12) cash flow to creditors = interest payment -long term debt at end +long-term debt at start
420-3100+3200=520
Cash flow to the creditors means the amount payable to the creditors company have to pay interest on the loan and the additional amount t that has raised by the company.
(13) net capital spending = depreciation + asset at begging - asset at end
330+5700-600=30
Capital spending means the amount spend on the fixed assets.
(14)change in networking capital = ending net working capital - opening net working capital
Ending net working capital=362
Opening net working capital=607
Change in net working capital=-245
As we seen before net working capital is current assets minus current liabilities so change in net working means ending working capital minus opening working capital.
(15)cash flow from assets=operating cash flow - net capital spending - change in net working capital
=908 -30 -(-245)
1123
As a new business setup the assets that the owner purchase from the amount that he /she invested or from the borrowed amount that's why
ASSET=CAPITAL+ LIABILITY
(11) cash for shareholder =
Cash from asset = cash for borrower + cash for shareholder
1123=520 + cash for borrower
Cash for borrower=603
As creditors and shareholders put their money in the asset from the return point of view that's why the equation set in .
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.