FINA3310-Practice_problems - Chapter 3- Practice problems...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 3- Practice problems Prepared by Dr. Theodossiou Free Cash Flow Practice Problem You are given the following financial statements for Martin Manufacturing Company. Calculate the Free Cash Flow (FCF) Sales Revenue $5,075,000 Less: Cost of Goods sold 3,704,000 Gross Profits $1,371,000 Less: Operating Expenses Selling Expense $650,000 Depreciation Expense 152,000 Total Operating Expense 1,218,000 $ Operating Profits or EBIT 153,000 $ Less: Interest Expense 93,000 $ Net Profits before taxes 60,000 $ Less: Taxes @ T=40% 24,000 Net profits after taxes 36,000 $ Martin Manufacturing Company Income Statement for the year ended December 31, 2009
Background image of page 1

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

View Full DocumentRight Arrow Icon
2009 2008 Current assets Cash 25,000 24,100 Accounts receivable 805,556 763,900 Inventories 700,625 763445 Total current assets $1,531,181 $1,551,445 Gross Fixed Assets 2,093,819 1,691,707 Less: Accumulated depreciation 500,000 348,000 Net fixed assets 1,593,819 1,343,707 Total assets 3,125,000 2,895,152 Current Liabilities Accounts payable $230,000 $400,500 Notes payable 311,000 370,000 Accruals 75,000 100,902 Total current liabilities $616,000 $871,402 Long term liabilities $1,165,250 $700,000 Total liabilities $1,781,250 $1,571,402 Stockholder's equity Preferred stock $50,000 $50,000 Common stock 400,000 400,000 Paid-in capital in excess of par 593,750 593,750 Retained earnings 300,000 280,000 Total stockholder's equity $1,343,750 $1,323,750 Total liabilities and stockholder's equity $3,125,000 $2,895,152 Martin Manufacturing Company Balance Sheets Liabilities and Stockholders' Equity December
Background image of page 2
FCF=OCF – NFAI – NCAI OCF=EBIT * (1-T) + depreciation = 153,000*(1-0.40) + 152,000 = $243,800 NFAI = net fixed assets 09 – net fixed assets 08 + depreciation = 1,593,819 -1,343,707 + 152,000 = $402,112 NCAI = (current assets 09 -current assets 08 )-((accounts payable 09 + accruals 09 ) - (accounts payable 08 + accruals 08 )) = = (1,531,181-1,551,445) – ((230,000 + 75,000) – (400,500 + 100,902)) = $176,138 FCF=OCF – NFAI – NCAI = $243,800 – $402,112 - $176,138 = -$334,450
Background image of page 3

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

View Full DocumentRight Arrow Icon
Practice Problem P3-10: Cash Budget –Advanced (Page 132) The actual sales and purchases for Xenocore, Inc. for September and October 2009, along with its forecast sales and purchases for the period November 2009 through April 2010, follow. Year
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/02/2011 for the course FINA 3310 taught by Professor Staff during the Spring '08 term at Texas A&M University, Corpus Christi.

Page1 / 9

FINA3310-Practice_problems - Chapter 3- Practice problems...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online