Accounting/Finance
cade
chapter_3.docx
|
SMOLIRA GOLF, INC. 2012 Income Statement |
|||||||
|
Sales |
|
|
|
|
$ |
375,123 |
|
|
Cost of goods sold |
|
|
|
|
|
258,000 |
|
|
Depreciation |
|
|
|
|
|
45,600 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest and taxes |
|
|
|
|
$ |
71,523 |
|
|
Interest paid |
|
|
|
|
|
15,400 |
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
$ |
56,123 |
|
|
Taxes (40%) |
|
|
|
|
|
22,449 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
$ |
33,674 |
|
|
|
|
|
|
|
|
|
|
|
Dividends |
$ |
21,000 |
|
|
|
|
|
|
Retained earnings |
|
12,674 |
|
|
|
|
|
|
|
|
Find the following financial ratios for Smolira Golf Corp. (use year-end figures rather than average values where appropriate): (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
Short-term solvency ratios: |
2011 |
2012 |
|
|
a. |
Current ratio |
times |
times |
|
b. |
Quick ratio |
times |
times |
|
c. |
Cash ratio |
times |
times |
|
|
|
Asset utilization ratios: |
||
|
d. |
Total asset turnover |
times |
|
e. |
Inventory turnover |
times |
|
f. |
Receivables turnover |
times |
|
|
|
Long-term solvency ratios: |
2011 |
2012 |
|
|
g. |
Total debt ratio |
times |
times |
|
h. |
Debt–equity ratio |
times |
times |
|
i. |
Equity multiplier |
times |
times |
|
|
|
|
||
|
j. |
Times interest earned |
times |
|
k. |
Cash coverage ratio |
times |
|
|
|
Profitability ratios: |
||
|
I. |
Profit margin |
% |
|
m. |
Return on assets |
% |
|
n. |
Return on equity |
% |
|
|
2.
|
Klingon Widgets, Inc., purchased new cloaking machinery five years ago for $5 million. The machinery can be sold to the Romulans today for $4.1 million. Klingon’s current balance sheet shows net fixed assets of $2.8 million, current liabilities of $720,000, and net working capital of $217,000. If all the current assets were liquidated today, the company would receive $0.99 million cash. |
|
What is the book value of Klingon’s total assets today? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) |
|
Book value of total assets |
$ |
|
What is the market value? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) |
|
Market value of total assets |
$ |
3.
|
The 2010 balance sheet of Maria’s Tennis Shop, Inc., showed $480,000 in the common stock account and $5.4 million in the additional paid-in surplus account. The 2011 balance sheet showed $520,000 and $5.7 million in the same two accounts, respectively. |
|
If the company paid out $430,000 in cash dividends during 2011, what was the cash flow to stockholders for the year? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) |
|
Cash flow to stockholders |
$ |
4.
|
The 2010 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $5.5 million, and the 2011 balance sheet showed long-term debt of $5.70 million. The 2011 income statement showed an interest expense of $180,000. During 2011, Maria’s Tennis Shop, Inc. realized the following: |
|
|
|
Cash flow to creditors |
$ |
-20,000 |
|
Cash flow to stockholders |
$ |
60,000 |
|
|
|
Suppose you also know that the firm’s net capital spending for 2011 was $1,400,000, and that the firm reduced its net working capital investment by $75,000. |
|
What was the firm’s 2011 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) |
|
Operating cash flow |
$ |
5.
|
You are given the following information for Calvani Pizza Co.: sales = $42,000; costs = $22,100; addition to retained earnings = $4,900; dividends paid = $1,600; interest expense = $4,500; tax rate = 35 percent. Calculate the depreciation expense. (Do not round intermediate calculations and round your final answer to nearest whole dollar amount.) |
|
Depreciation expense |
$ |
6.
|
Dimeback, Inc., is obligated to pay its creditors $6,100 during the year. (Leave no cells blank - be certain to enter "0" wherever required.) |
|
a. |
What is the market value of the shareholders’ equity if assets have a market value of $10,000? |
|
Market value |
$ |
|
b. |
What is the market value of the shareholders’ equity if assets equal $5,500? |
|
Market value |
$ |
7.
|
Zigs Industries had the following operating results for 2011: sales = $30,540; cost of goods sold = $19,910; depreciation expense = $5,380; interest expense = $2,790; dividends paid = $1,600. At the beginning of the year, net fixed assets were $17,360, current assets were $5,890, and current liabilities were $3,400. At the end of the year, net fixed assets were $20,810, current assets were $7,750, and current liabilities were $4,010. The tax rate for 2011 was 35 percent. |
|
a. |
What is net income for 2011? |
|
Net income |
$ |
|
b. |
What is the operating cash flow for 2011? |
|
Operating cash flow |
$ |
|
c. |
What is the cash flow from assets for 2011? (Negative amount should be indicated by a minus sign.) |
|
Cash flow from assets |
$ |
|
d-1 |
If no new debt was issued during the year, what is the cash flow to creditors? |
|
Cash flow to creditors |
$ |
|
d-2 |
If no new debt was issued during the year, what is the cash flow to stockholders? (Negative amount should be indicated by a minus sign.) |
|
Cash flow to stockholders |
$ |
8.
|
Just Dew It Corporation reports the following balance sheet information for 2011 and 2012. |
|
JUST DEW IT CORPORATION 2011 and 2012 Balance Sheets |
||||||||||||||||
|
Assets |
|
Liabilities and Owners’ Equity |
||||||||||||||
|
|
2011 |
|
2012 |
|
|
2011 |
|
2012 |
||||||||
|
Current assets |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Cash |
$ |
6,600 |
|
|
$ |
12,750 |
|
|
Accounts payable |
$ |
50,000 |
|
|
$ |
68,750 |
|
|
Accounts receivable |
|
12,200 |
|
|
|
14,250 |
|
|
Notes payable |
|
19,000 |
|
|
|
35,500 |
|
|
Inventory |
|
78,200 |
|
|
|
95,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
97,000 |
|
|
$ |
122,250 |
|
|
Total |
$ |
69,000 |
|
|
$ |
104,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
$ |
48,000 |
|
|
$ |
45,000 |
|
|
|
|
|
|
|
|
|
|
|
Owners’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and paid-in surplus |
$ |
50,000 |
|
|
$ |
50,000 |
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
233,000 |
|
|
|
300,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net plant and equipment |
$ |
303,000 |
|
|
$ |
377,750 |
|
|
Total |
$ |
283,000 |
|
|
$ |
350,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
400,000 |
|
|
$ |
500,000 |
|
|
Total liabilities and owners’ equity |
$ |
400,000 |
|
|
$ |
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For each account on this company’s balance sheet, show the change in the account during 2012 and note whether this change was a source or use of cash. (If there is no action select "None" from the dropdown options. Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.) |
|
|
2011 |
|
|
|
Sources/Uses |
|
2012 |
||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
$ |
6,600 |
|
|
$ |
|
|
|
|
|
$ |
12,750 |
|
|
Accounts receivable |
|
12,200 |
|
|
|
|
|
|
|
|
|
14,250 |
|
|
Inventory |
|
78,200 |
|
|
|
|
|
|
|
|
|
95,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
97,000 |
|
|
$ |
|
|
|
|
|
$ |
122,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net plant and equipment |
$ |
303,000 |
|
|
$ |
|
|
|
|
|
$ |
377,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
400,000 |
|
|
$ |
|
|
|
|
|
$ |
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Owners’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
50,000 |
|
|
$ |
|
|
|
|
|
$ |
68,750 |
|
|
Notes payable |
|
19,000 |
|
|
|
|
|
|
|
|
|
35,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
69,000 |
|
|
$ |
|
|
|
|
|
$ |
104,250 |
|
|
Long-term debt |
$ |
48,000 |
|
|
$ |
|
|
|
|
|
$ |
45,000 |
|
|
Owners' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and paid-in surplus |
$ |
50,000 |
|
|
$ |
|
|
|
|
|
$ |
50,000 |
|
|
Accumulated retained earnings |
|
233,000 |
|
|
|
|
|
|
|
|
|
300,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
283,000 |
|
|
$ |
|
|
|
|
|
$ |
350,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and owners' equity |
$ |
400,000 |
|
|
$ |
|
|
|
|
|
$ |
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
9.
|
Just Dew It Corporation reports the following balance sheet information for 2011 and 2012. |
|
JUST DEW IT CORPORATION 2011 and 2012 Balance Sheets |
||||||||||||||||
|
Assets |
|
Liabilities and Owners’ Equity |
||||||||||||||
|
|
2011 |
|
2012 |
|
|
2011 |
|
2012 |
||||||||
|
Current assets |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Cash |
$ |
4,350 |
|
|
$ |
9,800 |
|
|
Accounts payable |
$ |
48,000 |
|
|
$ |
49,800 |
|
|
Accounts receivable |
|
11,550 |
|
|
|
14,200 |
|
|
Notes payable |
|
10,350 |
|
|
|
18,600 |
|
|
Inventory |
|
58,350 |
|
|
|
75,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
74,250 |
|
|
$ |
99,800 |
|
|
Total |
$ |
58,350 |
|
|
$ |
68,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
$ |
42,000 |
|
|
$ |
34,000 |
|
|
|
|
|
|
|
|
|
|
|
Owners’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and paid-in surplus |
$ |
45,000 |
|
|
$ |
45,000 |
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
154,650 |
|
|
|
252,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net plant and equipment |
$ |
225,750 |
|
|
$ |
300,200 |
|
|
Total |
$ |
199,650 |
|
|
$ |
297,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
300,000 |
|
|
$ |
400,000 |
|
|
Total liabilities and owners’ equity |
$ |
300,000 |
|
|
$ |
400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on the balance sheets given for Just Dew It: |
|
a. |
Calculate the current ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
|
2011 |
2012 |
|
Current ratio |
times |
times |
|
|
|
b. |
Calculate the quick ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
|
2011 |
2012 |
|
Quick ratio |
times |
times |
|
|
|
c. |
Calculate the cash ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
|
2011 |
2012 |
|
Cash ratio |
times |
times |
|
|
|
d. |
Calculate the NWC to total assets ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
|
2011 |
2012 |
|
NWC ratio |
% |
% |
|
|
|
e. |
Calculate the debt–equity ratio and equity multiplier for each year. (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
|
2011 |
2012 |
|
Debt-equity ratio |
times |
times |
|
Equity multiplier |
|
|
|
|
|
f. |
Calculate the total debt ratio and long-term debt ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16)) |
|
|
2011 |
2012 |
|
Total debt ratio |
times |
times |
|
Long-term debt ratio |
times |
times |
|
|
10.
|
Y3K, Inc., has sales of $6,289, total assets of $2,905, and a debt–equity ratio of 1.50. If its return on equity is 12 percent, what is its net income? (Do not round intermediate calculation and round your final answer to 2 decimal places. (e.g., 32.16)) |
|
Net income |
$ |
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select)
