3A-W'07-EXAM#1-KEY

3A-W'07-EXAM#1-KEY - Econ 3A Financial Accounting W'07 Exam...

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Econ 3A - Financial Accounting - W'07 Exam # 1 - 100 points (show all your work; use good form) ANSWER KEY PROBLEM 1 (30 points) a. As of the end of its most recent fiscal year 2006, Gap, Inc. reported $5,425 million of total stockholders’ equity and its debt to total assets ratio was .38499. Compute the amount that Gap reported for total liabilities as of fiscal year-end 2006. Assets = Liabilities + Equity Assets = .38499*Assets + $5,425 .61501*Assets = $5,425 Assets = $8,821 Assets = Liabilities + Equity Assets – Equity = Liabilities $8,821 – $5,425 = $3,396 b. Gap, Inc.’s free cash flow for fiscal 2006 was $951 million; its capital expenditures were $600 million, dividends paid were $179 million, and purchases of short-term investments were $123 million. How much cash was provided by operations during 2006? Free cash flow = CFFO Cap exp Dividends $951 = CFFO $600 $179 $1,730 = CFFO Note: purchases of short-term investments are irrelevant.
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This test prep was uploaded on 04/19/2008 for the course ECON 3A taught by Professor Loster during the Winter '07 term at UCSB.

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3A-W'07-EXAM#1-KEY - Econ 3A Financial Accounting W'07 Exam...

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