Finance Home work.
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finance_home_work.docx2-7 Statement of Cash Flows Ramakrishnan Inc. reported 2012 net income of $15 million
and depreciation of $2,650,000. The top part of Ramakrishnan Inc.’s 2012 and 2011
balance sheets is reproduced below (in millions of dollars).
2012 2011 2012 2011
Current assets: Current liabilities:
Cash and marketable securities $ 20 $ 15 Accrued wages and taxes $ 19 $ 18
Accounts receivable 84 75 Accounts payable 51 45
Inventory 121 110 Notes payable 45 40
Total $225 $200 Total $115 $103
Calculate the 2012 net cash flow from operating activities for Ramakrishnan Inc. (LG2-4)
2-12 Statement of Retained Earnings Use the following information to find dividends paid to
common stockholders during 2012. (LG2-1)
Balance of retained earnings, December 31, 2011 $462m
Plus: Net income for 2012 15m
Less: Cash dividends paid
Preferred stock $ 1m
Common stock _____
Total cash dividends paid _____
Balance of retained earnings, December 31, 2012 $470m
2-16 Market Value versus Book Value Ava’s SpinBall Corp. lists fixed assets of $12 million on
its balance sheet. The firm’s fixed assets have recently been appraised at $16 million. Ava’s
SpinBall Corp.’s balance sheet also lists current assets at $5 million. Current assets were
appraised at $6 million. Current liabilities’ book and market values stand at $3 million and
the firm’s book and market values of long-term debt are $7 million. Calculate the book
and market values of the firm’s stockholders’ equity. Construct the book value and market
value balance sheets for Ava’s SpinBall Corp. (LG2-2)
2-24 Statement of Cash Flows Use the balance sheet and income statement below to construct
a statement of cash flows for Valium’s Medical Supply Corporation. (LG2-5)
VALIUM’S MEDICAL SUPPLY CORPORATION
Balance Sheet as of December 31, 2012 and 2011
(in thousands of dollars)
2012 2011 2012 2012
Assets Liabilities and Equity
Current assets: Current liabilities:
Cash and marketable securities $ 74 $ 73 Accrued wages and taxes $ 58 $ 45
Accounts receivable 199 189 Accounts payable 159 145
Inventory 322 291 Notes payable 131 131
Total $ 595 $ 553 Total $ 348 $ 321
Fixed assets: Long-term debt: $ 565 $ 549
Gross plant and equipment $1,084 $ 886 Stockholders’ equity:
Less: Depreciation 153 116 Preferred stock (6 thousand shares) $ 6 $ 6
Net plant and equipment $ 931 $ 770 Common stock and paid-in surplus
(100 thousand shares) 120 120
Other long-term assets 130 130 Retained earnings 617 457
Total $1,061 $ 900 Total $ 743 $ 583
Total assets $1,656 $1,453 Total liabilities and equity $1,656 $1,453
VALIUM’S MEDICAL SUPPLY CORPORATION
Income Statement for Years Ending December 31, 2012 and 2011
(in thousands of dollars)
2012 2011
Net sales $888 $798
Less: Cost of goods sold 387 350
Gross profits $501 $448
Less: Depreciation 37 35
Other operating expenses 48 42
Earnings before interest and taxes (EBIT) $416 $371
Less: Interest 46 40
Earnings before taxes (EBT) $370 $331
Less: Taxes 129 112
Net income $241 $219
Less: Preferred stock dividends $ 6 $ 6
Net income available to common stockholders $235 $213
Less: Common stock dividends 75 75
Addition to retained earnings $160 $138
Per (common) share data:
Earnings per share (EPS) $ 2.35 $ 2.13
Dividends per share (DPS) $ 0.75 $ 0.75
Book value per share (BVPS) $ 7.37 $ 5.77
Market value (price) per share (MVPS) $ 8.40 $ 6.25
4 2-34 Free Cash Flow Vinny’s Overhead Construction had free cash flow during 2012 of
$25.4 million. The change in gross fixed assets on Vinny’s balance sheet during 2012 was
$7.0 million and the change in net operating working capital was $8.4 million. Using this
information, fill in the blanks on Vinny’s income statement below. (LG2-5)
VINNY’S OVERHEAD CONSTRUCTION CORP.
Income Statement for Year Ending December 31, 2012
(in millions of dollars)
Net sales $____
Less: Cost of goods sold 116.10
Gross profits $66.00
Less: Depreciation 10.20
Other operating expenses $12.40
Earnings before interest and taxes (EBIT)
Less: Interest _____
Earnings before taxes (EBT) $____
Less: Taxes _____
