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Chapter 2 (2)

Chapter 2 (2) - Accounting 151 Section 16 Patrick Leblond...

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Accounting 151 Section 16 Patrick Leblond 09/07/06 Chapter 2 Problems P3A: a) Maxim Enterprises Income Statement For the Year Ended April 30, 2007 Revenues Selling revenues \$ 3,600 Expenses Income tax expense \$ 165 Interest expense 400 Selling expenses 210 Cost of goods sold 990 Wages expense 700 Depreciation expense 335 Total expense \$ 2,800 Net income \$ 800 b) Maxim Enterprises Classified Balance Sheet April 30, 2007 Current Assets Cash \$ 770 Accounts receivable 810 Inventories 967 Prepaid expenses 12 Short term investment 1,200 Total current assets \$ 3,759 Equipment, net of accumulated depreciation 1,220 Land 1,600 Building, net of accumulated depreciation 1,537 Total assets \$ 8,116 P7A: a) Wal-Mart Working Capital = \$34,421 - \$37,418 = (\$2,997) Target Working Capital = \$12,928 - \$8,314 = \$4,614 b) Wal-Mart Current Ratio = \$34,421/\$37,418 = 0.910:1 Target Current Ratio = \$12,928/\$8,314 = 1.555:1

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Accounting 151 Section 16 Patrick Leblond 09/07/06 c) (P7A) Wal-Mart Debt to Total Assets Ratio = \$23,871/\$104,912 = 22.8% Target Debt to Total Assets Ratio = \$12,013/\$31,392 = 38.3% d) Wal-Mart Free Cash Flow = \$15,996 - \$10,308 - \$1,569 = \$4119 Target Free Cash Flow = \$3,160 - \$ 3,004 - \$237 = (\$81) e) Wal-Mart Earnings per Share = (\$9,054 - \$0)/4,373 = \$2.07 Target Earnings per Share = (\$1,841 - \$0)/911 = \$2.02
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Chapter 2 (2) - Accounting 151 Section 16 Patrick Leblond...

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