FIN 300 Ungraded HW FinRat_Tax_RE Ch 3_4 - FIN 300 Ungraded HW Fin Ratios\/Tax\/Ret Earnings(Ch.s 3 4 1 Your firm has the following income statement items

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FIN 300 – Ungraded HW – Fin Ratios/Tax/Ret. Earnings (Ch.’s 3 & 4) 1. Your firm has the following income statement items: sales of \$100,000,000; income tax of \$2,000,000; operating expenses of \$50,000,000; cost of goods sold of \$20,000,000; and interest expense of \$10,000,000; the firm pays a \$5,000,000 dividend Calculate the firm’s gross profit, EBIT, taxable income (or, income before tax), net income, average (or, effective) tax rate, and the firm’s change in retained earnings on the balance sheet 2. Your firm has the following balance sheet statement items: total current liabilities of \$2,000,000; total assets of \$10,000,000; fixed and other assets of \$6,000,000; and long-term debt of \$2,000,000. Calculate the amount of the firm’s total current assets, total stockholders’ equity, net working capital 3. In 2010, Sparky, Inc. expects operating income (earnings before interest and taxes, or EBIT) of \$10,000,000. In addition, the corporation has \$30,000,000 of debt outstanding with a 5 percent interest rate and will pay \$5,000,000 in dividends to its common stockholders. Assume that Sparky will receive no other sources of income during 2010. What is Sparky’s taxable income for 2010? Hayden Company Financial Information June2005 June 2006 Net income \$3,000 \$3,000 Accounts receivable 1,500 750 Accumulated depreciation 1,125 1,500 Common stock 9,000 5,250 Capital surplus 15,000 16,500 Retained earnings 3,000 4,500

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