{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# h1 - Problem Set#1 Solutions 1 To find owner's equity we...

This preview shows pages 1–2. Sign up to view the full content.

Problem Set #1 – Solutions 1. To find owner’s equity, we must construct a balance sheet as follows: Balance Sheet CA \$4,000 CL \$3,400 NFA 22,500 LTD 6,800 OE ?? TA \$26,500 \$26,500 We know that total liabilities and owner’s equity (TL & OE) must equal total assets of \$26,500. We also know that TL & OE is equal to current liabilities plus long-term debt plus owner’s equity, so owner’s equity is: OE = \$26,500 – 6,800 – 3,400 = \$16,300 NWC = CA – CL = \$4,000 – 3,400 = \$600 2. The income statement for the company is: Income Statement Sales \$634,000 Costs 305,000 Depreciation 46,000 EBIT \$283,000 Interest 29,000 EBT \$254,000 Taxes(35%) 88,900 Net income \$165,100 8. To calculate OCF, we first need the income statement: Income Statement Sales \$14,200 Costs 5,600 Depreciation 1,200 EBIT \$7,400 Interest 680 Taxable income \$6,720 Taxes (35%) 2,352 Net income \$4,368 OCF = EBIT + Depreciation – Taxes = \$7,400 + 1,200 – 2,352 = \$6,248 14. To find the OCF, we first calculate net income.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

h1 - Problem Set#1 Solutions 1 To find owner's equity we...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online