Francis Roman
FIN100.2
Chapter 2
1. Given
Current Assets
$4,000
Current Liabilities
$3,400
Net Fixed Assets
$22,500
Long-term Debt
$6,800
$26,500
$10,200
Equation
Share Holder's Equity
$26,500
$4,000
$10,200
$3400
Solution
$16300
$600
2. Given
sales = $634,000
costs = $305,000
tax rate = 35%
depreciation = $46,000
interest expense = $29,000
Equation
sales
634000
- costs
-305000
- expenses
-46000
-29000
254000
- tax rate
- .35
88900
Solution
net income =
$165,100
3. Given
same problem from #2, with $86,000 dividends
Equation
Addition to retained earnings = Net income - Cash dividends
165,100 - 86,000 = 79,100
Solution
Addition to retained earnings = $79,100
4. Given
Firm had $30,000 shares of common stock outstanding
Equation
EPS= net income/total shares outstanding
Dividends per share = Cash dividends / Common stock outstanding
Solution
165,100/30,000 = $5.50 EPS
86,000/30,000 = 2.87 DPS
5. Given
Net Working Capt: Book = $410k
Market = 1.8 M
Net Fixed Assets: Book = 7 M
Market = 3.7 M
Equation
Net Working Capt + Net Fixed Assets = Book/Market Value
Capital