Session2_HW2 Solution - $11,966,630 Total current...

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SESSION 2 HOMEWORK SOLUTIONS Question 3.2 Inventory accounting: Differentiate between FIFO and LIFO FIFO (first in, first out) refers to the practice of firms, when making sales, assuming that the inventory that came in first (at a lower price) is being sold first. LIFO (last in, first out) implies that a firm is selling the higher cost, newer inventory first, leaving the lower cost, older inventory on the balance sheet. Question 3.5 Working Capital: Laurel Electronics reported the following information at its annual meetings: The company had cash and marketable securities worth $1,235,455, accounts payable worth $4,159,357, inventory of $7,121,599, account receivable of $3,488,121, short-term notes payable worth $1,151,663, and other current assets of $121,455. What is the company's net working capital? Total current assets $1,235,455 + $3,488,121 + $7,121,599 + $121,455
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Unformatted text preview: $11,966,630 Total current liabilities $4,159,357 + $1,151,663 $5,311,020 New working capital $11,966,630 - $5,311,020 $6,655,610 Question 3.20 Income statement: Sosa Corporation recently reported EBITDA of $31.3 million and $9.7 million of net income. The company has $6.8 million interest expense, and the corporate tax rate is 35 percent. What was its depreciation and amortization expense? Amount EBITDA $31,300,000 Less Depreciation and amortization $9,576,923 EBIT $21,723,077 Interest Expense $6,800,000 EBT $14,923,077 Taxes (35%) $5,223,077 Net Income $9,700,000 Question 3.26 Revenues $33,144,680.00 Costs 20,218,254.80 EBITDA $12,926,425.20 Depreciation 4,458,082.96 EBIT $8,468,342.24 Interest 392,168.00 EBT $8,076,174.24 Taxes (34%) 2,745,899.24 Net income $5,330,275.00 The calculations can be understood by examining the formulas in the cells....
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