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quiz1solution - QUIZ 1 Finance 310-04 Fall 2005 Instructor:...

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QUIZ 1 Finance 310-04 Fall 2005 Instructor: Marlena L. Akhbari Name: ___________ Key ________ Section I. Problems Problem 1. Using the following information, please answer questions a through f. 2004 2005 Sales $2,900 $3,300 Cost of Goods Sold 2,030 2,310 Interest 410 420 Dividends 56 79 Depreciation 290 330 Cash 250 150 Receivables 242 412 Accounts Payable 900 1,100 Inventory 1,015 900 Long-term Debt 3,200 3,100 Net fixed assets 6,000 5,700 Tax rate 34% 34% a. What is net income for 2005? (5 points) Sales 3300 COGS 2310 Depreciation 330 EBIT 660 Interest 420 EBT 240 Taxes 81.6 Net Income 158.4
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b. What is operating cash flow for 2005? (5 points) Operating Cash Flow = EBIT – Taxes + depreciation 660 – 81.60 + 330 = 908.40 c. What is net capital spending for 2005? (5 points) Net Capital Spending = Change in NFA + Depreciation -330 + 330 = 30 d. What is cash flow from assets for 2005? (5 points) Cash flow from assets = OCF – net capital spending – change in NWC Change in NWC = NWC 2005 – NWC 2004 (Cash + A/R + Inv – (A/P + Acc)) 2005 – (Cash + A/R + Inv – (A/P + Acc)) (150 + 412 + 900 – 1100) – (250 + 242 + 1015 – 900) = -245 Cash Flow from assets = 908.40 – 30 – (-245) = 1123.40
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e. What is cash flow to stockholders for 2005? (5 points) Cash flow to stockholders = dividends + change in C.S. 79 + You need a balanced balance sheet to do this part 2004 2005 2004 2005 Cash 250 150 Accts. Payable 900 1100 Receivables 242 412 LT Debt 3200 3100 Inventory 1015 900 C.S. 3407 2962 NFA 6000 5700 Total assets 7507 7162 7507 7162 There was a repurchase so using NI and Div we need to find out how much was repurchased. CS 2004 + NI – Divs – repurchases = CS 2005 3407 + 158.4 – 79 – repurchases = 2962 Repurchases = 3407 +158.4 – 79 -2962 =524.40 So cash flow to stockholders = 79 + 524.40 = 603.40 f. What is cash flow to creditors for 2005? (5 points) Cash flow to Creditors = - interest + change in interest bearing debt accounts -420 + (-100) = 520 g. Please create a statement of sources and uses of cash for this company for 2005. (10 BONUS POINTS ) Sources Uses Net Income 158.40 Dividends 79 Depreciation 330.00 Increase in A/R 170 Decrease in Inventory 115 decrease in LTD 100 Increase in A/P 200 purchase of FA 30 repurchases 524.4 decrease in Cash 100 Total 903.40 Total 903.40
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h. Create a common-size income statement for 2005. (10 points)
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This note was uploaded on 12/06/2011 for the course ECON 101 taught by Professor Adam during the Spring '06 term at Neumann.

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quiz1solution - QUIZ 1 Finance 310-04 Fall 2005 Instructor:...

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