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Q1A - ABC has financed its operations with short term debt...

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QUIZ ONE: BUSINESS 312 NAME ____________________________ Answer this quiz directly on this sheet of paper. You can use the back if necessary. The following information is available on the financial accounts of ABC Corporation. 1996 Sales 2,000 Cost of Goods Sold 1,400 General and Administrative Expenses 200 interest 60 depreciation (which equals CCA) 35 corporate tax rate ? 1995 1996 Accounts Receivable 268 ? Inventory 100 ? Net Fixed Assets 3000 Short Term Debt 600 ? Accounts Payable 200 ? Equity ? 2,517 “Equity” represents the sum of all of the accounting equity accounts. The following additional financial information is available for ABC. ABC has a trade capital to sales ratio of 10% (i.e., trade capital for the end of the fiscal year divided by sales for that same year).
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Unformatted text preview: ABC has financed its operations with short term debt and with common equity. Dividends for 1996 are $95. ABC borrowed additional short term debt in 1996. They also repurchased $200 of shares in 1996. Free cash flow in 1996 was $25. Required: Based on the information at hand, and the definition(s) of free cash flow developed in class , determine the invested capital balance sheet for ABC for both 1995 and 1996. For each year find trade capital, net fixed assets, short term debt and “equity.” What was ABC’s corporate tax rate in 1996? What was ABC’s expenditure for plant property and equipment for 1996 (i.e., capital expenditure)? Find free cash flow for 1996 using the operating definition. Solution...
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