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ch06boc-model - Worksheet for Chapter 6 BOC Questions The...

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1 of 3 Worksheet for Chapter 6 BOC Questions 2/4/03 The Chapter 6 BOC questions can be answered verbally, but we like to go through the following model both to illustrate the points and to get students more familiar with Excel. Note that the data used in this file are also used to illustrate the Chapter 7 BOC questions. Here are the very simple financial statements that we use to illustrate the questions, arranged with annual data in columns. Note that although accounting data are set up with the most recent years to the left, we reversed this arrangement because, with spreadsheets, it seems more logical to have years progressing to the right. Balance Sheets 2003 2004 Cash in bank $5 $6 Marketable securities $5 $6 Accounts receivable $10 $12 Inventories $25 $26 Current assets $45 $50 Net fixed assets $45 $50 Total assets $90 $100 Accounts payable $35 $36 Notes payable $9 $8 Accrued wages & taxes $5 $6 Current liabilities $49 $50 Long-term debt $25 $30 Total liabilities $74 $80 Common stock (10 shares outstanding) $1 $1 Retained earnings $15 $19 Total common equity $16 $20 Total liabilities & equity $90 $100 Income Statements 2003 2004 Sales (net of discounts) $90.00 $100.00 Cost of goods sold (COGS) 73.00 76.00 Admin and credit costs 5.00 6.00 Depreciation and amortization 4.00 5.00 Operating Income (EBIT) $8.00 $13.00 Interest expense 3.00 3.00 Taxable income $5.00 $10.00 Taxes 40% 2.00 4.00 Net income $3.00 $6.00 Dividends $1.00 $2.00 Additions to R.E. $2.00 $4.00 Statement of Cash Flows Basically, the statement of cash flows starts with net income, adds back depreciation and other non-cash charges,
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