HW Solutions_Session 2_Parrino_Ch 3

HW Solutions_Session 2_Parrino_Ch 3 - sults in lower cost...

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THIS DOCUMENT IS STRICTLY FOR THE USE OF CURRENT STUDENTS IN MG 3.2 Differentiate between FIFO and LIFO. FIFO (first in, first out) refers to the practice of firms, when making sales During inflationary (rising cost) environments, relative to LIFO, FIFO res 3.5 Current Assets Cash $1,235,455 Accounts Receivable $3,488,121 Inventory $7,121,599 Other Current Assets $121,455 Total Current Assets $11,966,630 Net Work Capital = Total Current Assets - Total Current Liabilities 3.2 EBITDA $31,300,000 $9,576,923 EBIT $21,723,077 Interest $6,800,000 EBT $14,923,077 Taxes $5,223,077 Net Income $9,700,000 3.26 Revenue $13,144,680 Costs $8,018,255 EBITDA $5,126,425 $540,275 EBIT $4,586,150 Interest $392,168 EBT $4,193,982 Taxes $1,425,954 Net Income $2,768,028
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GMT 640 COURSE. IT MAY NOT BE REPRODUCED OR DISTRIBUTED TO OTHERS, INCLUDING s, assuming that the inventory that came in first is being sold first. LIFO (last in, last out) implies that a fir
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Unformatted text preview: sults in lower cost of goods sold (CGS), higher profits, higher EPS, and higher taxes, other factors held c Current Liabilities Acctounts Payable $4,159,357 Notes Payable $1,151,663 Total Current Liabilities $5,311,020 $6,655,610 4) Depr & Amort = EBITDA - EBIT 3) EBIT = EBT + I Given 1) EBT = NI / (1-T) 2) Taxes = EBT x T Given Given 1) Costs = Revenue x % costs 2) EBITDA = Revenue - Costs 6) Depr & Amort = EBITDA = EBIT 5) EBIT = EBT + I 3) EBT = NI / (1-T) 4) Taxes = EBT x T Given ANY FUTURE STUDENTS OF THE COURSE. irm is selling the newer inventory first, leaving the older inventor y on the balance sheet. constant. The opposite occurs during the deflationary (declining) cost enviro nments....
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This note was uploaded on 02/14/2011 for the course MGMT 640 taught by Professor Bathala during the Summer '09 term at UMBC.

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HW Solutions_Session 2_Parrino_Ch 3 - sults in lower cost...

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