YOU MUST SHOW ALL CALCULATIONS TO EARN CREDIT . 2016 2017 BALANCE SHEETS: Cash 1
ID: 400221 • Letter: Y
Question
YOU MUST SHOW ALL CALCULATIONS TO EARN CREDIT.
2016 2017
BALANCE SHEETS:
Cash 120,000 160,000
Accounts Receivable 520,000 620,000
Inventory 305,000 290,000
Fixed Assets, net 410,000 510,000
Total Assets 1,355,000 1,580,000
Liabilities and Equity:
Accounts Payable 350,000 $375,000
Long-term Debt 500,000 625,000
Common Stock 50,000 75,000
Retained Earnings 455,000 505,000
Total Liabilities and Equity 1,355,000 1,580,000
INCOME STATEMENT:
Revenue 3,500,000
Cost of Goods Sold 2,275,000
General and Administrative 515,000
Depreciation Expense 120,000
Earnings Before Interest and Taxes 590,000
Interest Expense 40,000
Pretax Net Income 550,000
Income Taxes 167,000
Net Income 383,000
What was Gannon’s total current assets at the end of 2017?
What was Gannon’s net working capital at the end of 2017?
What was Gannon’s shareholders’ equity at book value at the end of 2017?
An appraiser recently valued Gannon’s fixed assets at $600,000 and determined that $40,000 of their accounts receivable was noncollectible. Based on only this information and the balance sheet above, what was the market value of Gannon’s shareholders’ equity at the end of 2017?
Assuming that Gannon did not buy back or redeem any of its shares, how much new common stock did it issue in 2017?
How much dividends did Gannon pay out to its shareholders in 2017?
What was Gannon’s effective annual average tax rate in 2017?
If Gannon had 18,000 shares of common stock outstanding throughout 2017, what was its Earnings per Share (EPS) in 2017?
Assuming that Gannon didn’t dispose of any of its fixed assets, how much new capital spending did it incur in 2017?
What was Gannon’s Operating Cash Flow (OCF) in 2017?
What was Gannon’s investment in net working capital for 2017?
What was Gannon’s Cash Flow to Creditors in 2017?
What was Gannon’s Cash Flow to Stockholders in 2017?
Explanation / Answer
Current Assets = 160k Cash + 620k A/R + 290k Inventory = 1,070,000
NWC = 1,070k Current Assets – 375k A/P = 695,000
Book Value SE = 75k Common + 505k Retained Earnings = 580,000
Market Value SE = 160k Cash + 580k A/R + $290k Inventory + $600k Fixed Assets - $375k A/P - $625k Debt = 630,000
75,000-25,000=25,000
Ending RE = Beginning RE + Net Income – Dividends
505k = 455k + 383k – Dividends;
Solve for Dividends
Dividends = 455k + 383k - $505k = 333,000
Average tax rate = 167k / 550k = 30.4%
383,000/18,000=$21.277777=$21.28
Net Capital Spending = 510k Ending Fixed Assets – (410k Beginning Fixed Assets - $120k Depreciation) = 510k – 290k = 220,000
OCF = 590k EBIT + 120k depreciation – 167k taxes = 543,000
NWC(2017) = 160k Cash + 620k A/R + 290k Inventory - $375k A/P = 695,000
NWC(2016) = 120k Cash + 520k A/R + 305k Inventory - $350k A/P = 595,000
Investment in NWC = 695k – 595k = 100,000
Net New Borrowing = 625k – 500k = 125k
CFC = 40k Interest Expense – 125k Net New Borrowing = -85,000
Net New Equity = 75k - 50k = 25k
CFS = 333k Dividends – 25k Net New Equity = 308,000
KINDLY RATHE THE ANSWER AS THUMBS UP. THANKS A LOT.
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