Solutions for Analysis for Financial Management, 13th
@jg @jg @jg @jg @jg @jg
Edition by Robert C. Higgins, Jennifer Koski, Todd
@ j g @jg @jg @jg @jg @jg @jg @jg
Mitton @jg
TEST BANK!!! @jg
,Analysis for Financial Management, 13e
SUGGESTED ANSWERS TO EVEN-NUMBERED PROBLEMS
Chapter 1
2. Management is either foolish or thinks its board is. Earning $100 million on a $5 billion
equity investment is a return of 2 percent, which is below any reasonable cost of equity.
As a board member, I would vote to cut management’s compensation, not raise it. I
would also criticize them for apparently attempting to deceive the board.
4. a. Cash rises $500,000; plant and equipment falls $300,000; equity rises $200,000.
b. Net plant and equipment rises $80 million; Cash falls $32 million; Bank debt rises
$48 million.
c. Net plant and equipment rises $60 million; cash falls $60 million.
d. Cash falls $40,000; Accounts payable falls $40,000.
e. Cash falls $240,000; Owners’ equity falls by $240,000 (via an increase in Treasury
stock).
f. Cash rises $80,000; Inventory falls; Accrued taxes, Owners’ equity, and possibly
other cost categories rise such that the algebraic sum equals $80,000.
g. Accounts receivable rise $120,000. Other categories change as described in part f.
h. Cash falls $50,000. Owners’ equity falls by $50,000 (via Retained earnings).
6. a. R&E Supplies, Inc. Sources and Uses Statement 2018–2021 ($ thousands)
Sources of cash:
Decrease in cash and securities $259
Increase in accounts payable 2,205
Increase in current portion long-term debt 40
Increase in accrued wages 13
Increase in retained earnings 537
Total $3,054
Uses of cash:
Increase in accounts receivable $1,543
Increase in inventories 1,148
Increase in prepaid expenses 4
Increase in net fixed assets 159
Decrease in long-term debt 200
Total $3,054
,b. Insights:
i. R&E @jgis @jgmaking @jgextensive @jguse @jgof @jgtrade @jgcredit @jgto @jgfinance @jga @jgbuildup @jgin
@jgcurrent @jgassets. @jgThe @jgincrease @jgin @jgaccounts @jgpayable @jgequals @jg almost @jgthree
@jgfourths @jgof @jgtotal @jgsources @jgof @jgcash. @jgIncreasing @jgaccounts @jgreceivable @jgand
@jginventories @jgaccount @jgfor @jgalmost @jg90 @jgpercent @jgof @jgthe @jguses @jgof @jg cash.
ii. External @jglong-term @jgdebt @jgfinancing @jgis @jga @jguse @jgof @jgcash @jgfor @jgR&E, @jgmeaning
@jgthat @jgit @jgis @jgrepaying @jgits @jgloans. @jgA @jgrestructuring @jginvolving @jgless @jgreliance @jgon
@jgaccounts @jgpayable @jgand @jgmore @jgbank @jgdebt @jgappears @jgappropriate.
8. @jgAccounting @jgincome @jgwill @jgbe @jgthe @jgvalue @jgof @jgthe @jgparcels @jgsold, @jgless @jgtheir
@jgoriginal @jgpurchase @jgprice. @jgSo @jgif @jgall @jgparcels @jgare @jgsold, @jgthe @jgincome @jgis @jg5
@jg× @jg$16 @jgmillion @jg+ @jg5 @jg× @jg$8 @jgmillion @jg– @jg$100 @jgmillion @jg= @jg$20 @jgmillion.
@jgEconomic @jgincome @jgwill @jgbe @jgthe @jgincrease @jgin @jgthe @jgmarket @jgvalue @jgof @jgthe @jgland,
@jgwhether @jgsold @jgor @jgnot, @jgover @jgthe @jgperiod. @jgAt @jgthe @jgend @jgof @jgthe @jgfirst @jgyear,
@jgthis @jgwill @jgbe @jg$20 @jgmillion. @jgAnswers @jgto @jgeach @jgpart @jgof @jgthe @jgquestion
@jgappear @jgbelow.
Question Accounting @ j g Income Economic @ j g Income
a. $20 @jgmillion $20 @jgmillion
b. $0 $20 @jgmillion
c. –$10 @jgmillion $20 @jgmillion
d. $30 @jgmillion $20 @jgmillion
e. @ j gToo @jgmany @jgcompanies @jghave @jgtried @jgthis. @jgIf @jgthe @jgmarket @jgvalue @jgof @jga
@jgpiece @jgof @jgland @jgfalls, @jgthe @jgowner @jgloses @jgwhether @jghe @jgsells @jgor @jgnot. @jgThe
@jgmarket @jgprice @jgof @jgthe @jgland @jgfell @jgbecause @jgpeople @jgthought @jgthe @jgfuture
@jgincome @jgstream @jgto @jgthe @jgowners @jgwas @jgworth @jgless. @jgContinuing @jgto @jghold
@jgthe @jgproperty @jgforces @jgthe @jgowner @jgto @jgaccept @jgthe @jglower @jgincome.
@jgWhether @jgthe @jgloss @jgis @jgrecognized @jgor @jgnot @jgmight @jgaffect @jgaccounting
@jgearnings, @jgbut @jghas @jgnothing @jgto @jgdo @jgwith @jgreality.
10. The @jgaccounting @jgprofits @jgfrom @jgDesmond’s @jgbrewery @jgare @jgexpected @jgto @jgbe
@jg$60,000. @jgThese @jgaccounting @jgprofits @jgdo @jgnot @jginclude @jgthe @jgimplicit @jgcost @jgof
@jgthe @jgentrepreneur’s @jgtime. @jgDesmond’s @jgtime @jgis @jgworth @jgat @jgleast @jg$70,000, @jgthe
@jgcurrent @jgincome @jghe @jgwill @jghave @jgto @jgforego @jgto @jgmanage @jgthe @jgbrewery. @jgWhen
@jgthese @jgimplicit @jg opportunity @jgcosts @jgare @jgincluded @jgincome @jgfalls @jgto:
$250,000 @jg– @jg$190,000 @jg– @jg$70,000 @jg= @jg–$10,000
This @jgnew @jgventure @jgwill @jgclearly @jgreduce @jgDesmond’s @jgincome, @jgnot @jgincrease @jgit.
, 12. a.
Company A B C
End-of-year
cash @jgbalance $150 @jgmillion $30 @jgmillion $120 @jgmillion
b. It appears @jgthat @jgcompany @jgC @jgretired @jgmore @jgdebt @jgthan @jgit @jgissued,
@jg
@jgrepurchased @jgmore @jgstock @jgthan @jgit @jgissued, @jgor @jgsome @jgcombination @jgof
@jgthe @jgtwo.
c. I’d @jgprefer @jgto @jgown @jgcompany @jgA. @jgA @jgappears @jgto @jgbe @jga @jggrowing @jgcompany
@jgas @jgevidenced @jgby @jgthe @jgsizable @jgnet @jgcash @jgused @jgin @jginvesting @jgactivities,
@jgand @jgits @jgnegative @jgnet @jgcash @jgflow @jgfrom @jgoperations @jgmay @jgwell @jgbe @jgdue
@jgto @jgincreasing @jgaccounts @jgreceivable @jgand @jginventories @jgthat @jgnaturally
@jgaccompany @jgsales @jggrowth. @jgCompany @jgB @jgappears @jgnot @jgto @jg be @jggrowing,
@jgso @jgits @jgnegative @jgnet @jgcash @jgflows @jgfrom @jgoperations @jgare @jgprobably @jgdue @jgto
@jglosses @jgor @jgto @jgincreasing @jgreceivables @jgand @jginventories @jgrelative @jgto @jgsales,
@jga @jgtrend @jgdenoting @jgpoor @jgmanagement @jgof @jgcurrent @jgassets.
d. I @jgdon’t @jgthink @jgthere @jgis @jgnecessarily @jgany @jgcause @jgfor @jgconcern. @jgIt @jgappears
@jgcompany @jgC @jgis @jga @jgmature, @jgslow-growth @jgcompany @jgthat @jgis @jgreturning
@jgits @jgunneeded @jgoperating @jgcash @jgflows @jgto @jginvestors @jgin @jgthe @jgform @jgof
@jgdebt @jgrepayment, @jgshare @jgrepurchase, @jgdividends, @jgor @jgsome @jgcombination
@jgof @jgthese. @jgThis @jgis @jga @jgperfectly @jgviable @jgstrategy @jgin @jgthe @jgabsence @jgof
@jgattractive @jginvestment @jgopportunities.
14. @jgSee @ j g suggested @ j g solutions @ j g to @ j g Excel @ j g problems @ j g at @ j g McGraw-Hill’s
@ j g Connect @ j g or @ j g at @jgwww.mhhe.com/Higgins13e.
@jg @jg @jg @jg @jg @jg
Edition by Robert C. Higgins, Jennifer Koski, Todd
@ j g @jg @jg @jg @jg @jg @jg @jg
Mitton @jg
TEST BANK!!! @jg
,Analysis for Financial Management, 13e
SUGGESTED ANSWERS TO EVEN-NUMBERED PROBLEMS
Chapter 1
2. Management is either foolish or thinks its board is. Earning $100 million on a $5 billion
equity investment is a return of 2 percent, which is below any reasonable cost of equity.
As a board member, I would vote to cut management’s compensation, not raise it. I
would also criticize them for apparently attempting to deceive the board.
4. a. Cash rises $500,000; plant and equipment falls $300,000; equity rises $200,000.
b. Net plant and equipment rises $80 million; Cash falls $32 million; Bank debt rises
$48 million.
c. Net plant and equipment rises $60 million; cash falls $60 million.
d. Cash falls $40,000; Accounts payable falls $40,000.
e. Cash falls $240,000; Owners’ equity falls by $240,000 (via an increase in Treasury
stock).
f. Cash rises $80,000; Inventory falls; Accrued taxes, Owners’ equity, and possibly
other cost categories rise such that the algebraic sum equals $80,000.
g. Accounts receivable rise $120,000. Other categories change as described in part f.
h. Cash falls $50,000. Owners’ equity falls by $50,000 (via Retained earnings).
6. a. R&E Supplies, Inc. Sources and Uses Statement 2018–2021 ($ thousands)
Sources of cash:
Decrease in cash and securities $259
Increase in accounts payable 2,205
Increase in current portion long-term debt 40
Increase in accrued wages 13
Increase in retained earnings 537
Total $3,054
Uses of cash:
Increase in accounts receivable $1,543
Increase in inventories 1,148
Increase in prepaid expenses 4
Increase in net fixed assets 159
Decrease in long-term debt 200
Total $3,054
,b. Insights:
i. R&E @jgis @jgmaking @jgextensive @jguse @jgof @jgtrade @jgcredit @jgto @jgfinance @jga @jgbuildup @jgin
@jgcurrent @jgassets. @jgThe @jgincrease @jgin @jgaccounts @jgpayable @jgequals @jg almost @jgthree
@jgfourths @jgof @jgtotal @jgsources @jgof @jgcash. @jgIncreasing @jgaccounts @jgreceivable @jgand
@jginventories @jgaccount @jgfor @jgalmost @jg90 @jgpercent @jgof @jgthe @jguses @jgof @jg cash.
ii. External @jglong-term @jgdebt @jgfinancing @jgis @jga @jguse @jgof @jgcash @jgfor @jgR&E, @jgmeaning
@jgthat @jgit @jgis @jgrepaying @jgits @jgloans. @jgA @jgrestructuring @jginvolving @jgless @jgreliance @jgon
@jgaccounts @jgpayable @jgand @jgmore @jgbank @jgdebt @jgappears @jgappropriate.
8. @jgAccounting @jgincome @jgwill @jgbe @jgthe @jgvalue @jgof @jgthe @jgparcels @jgsold, @jgless @jgtheir
@jgoriginal @jgpurchase @jgprice. @jgSo @jgif @jgall @jgparcels @jgare @jgsold, @jgthe @jgincome @jgis @jg5
@jg× @jg$16 @jgmillion @jg+ @jg5 @jg× @jg$8 @jgmillion @jg– @jg$100 @jgmillion @jg= @jg$20 @jgmillion.
@jgEconomic @jgincome @jgwill @jgbe @jgthe @jgincrease @jgin @jgthe @jgmarket @jgvalue @jgof @jgthe @jgland,
@jgwhether @jgsold @jgor @jgnot, @jgover @jgthe @jgperiod. @jgAt @jgthe @jgend @jgof @jgthe @jgfirst @jgyear,
@jgthis @jgwill @jgbe @jg$20 @jgmillion. @jgAnswers @jgto @jgeach @jgpart @jgof @jgthe @jgquestion
@jgappear @jgbelow.
Question Accounting @ j g Income Economic @ j g Income
a. $20 @jgmillion $20 @jgmillion
b. $0 $20 @jgmillion
c. –$10 @jgmillion $20 @jgmillion
d. $30 @jgmillion $20 @jgmillion
e. @ j gToo @jgmany @jgcompanies @jghave @jgtried @jgthis. @jgIf @jgthe @jgmarket @jgvalue @jgof @jga
@jgpiece @jgof @jgland @jgfalls, @jgthe @jgowner @jgloses @jgwhether @jghe @jgsells @jgor @jgnot. @jgThe
@jgmarket @jgprice @jgof @jgthe @jgland @jgfell @jgbecause @jgpeople @jgthought @jgthe @jgfuture
@jgincome @jgstream @jgto @jgthe @jgowners @jgwas @jgworth @jgless. @jgContinuing @jgto @jghold
@jgthe @jgproperty @jgforces @jgthe @jgowner @jgto @jgaccept @jgthe @jglower @jgincome.
@jgWhether @jgthe @jgloss @jgis @jgrecognized @jgor @jgnot @jgmight @jgaffect @jgaccounting
@jgearnings, @jgbut @jghas @jgnothing @jgto @jgdo @jgwith @jgreality.
10. The @jgaccounting @jgprofits @jgfrom @jgDesmond’s @jgbrewery @jgare @jgexpected @jgto @jgbe
@jg$60,000. @jgThese @jgaccounting @jgprofits @jgdo @jgnot @jginclude @jgthe @jgimplicit @jgcost @jgof
@jgthe @jgentrepreneur’s @jgtime. @jgDesmond’s @jgtime @jgis @jgworth @jgat @jgleast @jg$70,000, @jgthe
@jgcurrent @jgincome @jghe @jgwill @jghave @jgto @jgforego @jgto @jgmanage @jgthe @jgbrewery. @jgWhen
@jgthese @jgimplicit @jg opportunity @jgcosts @jgare @jgincluded @jgincome @jgfalls @jgto:
$250,000 @jg– @jg$190,000 @jg– @jg$70,000 @jg= @jg–$10,000
This @jgnew @jgventure @jgwill @jgclearly @jgreduce @jgDesmond’s @jgincome, @jgnot @jgincrease @jgit.
, 12. a.
Company A B C
End-of-year
cash @jgbalance $150 @jgmillion $30 @jgmillion $120 @jgmillion
b. It appears @jgthat @jgcompany @jgC @jgretired @jgmore @jgdebt @jgthan @jgit @jgissued,
@jg
@jgrepurchased @jgmore @jgstock @jgthan @jgit @jgissued, @jgor @jgsome @jgcombination @jgof
@jgthe @jgtwo.
c. I’d @jgprefer @jgto @jgown @jgcompany @jgA. @jgA @jgappears @jgto @jgbe @jga @jggrowing @jgcompany
@jgas @jgevidenced @jgby @jgthe @jgsizable @jgnet @jgcash @jgused @jgin @jginvesting @jgactivities,
@jgand @jgits @jgnegative @jgnet @jgcash @jgflow @jgfrom @jgoperations @jgmay @jgwell @jgbe @jgdue
@jgto @jgincreasing @jgaccounts @jgreceivable @jgand @jginventories @jgthat @jgnaturally
@jgaccompany @jgsales @jggrowth. @jgCompany @jgB @jgappears @jgnot @jgto @jg be @jggrowing,
@jgso @jgits @jgnegative @jgnet @jgcash @jgflows @jgfrom @jgoperations @jgare @jgprobably @jgdue @jgto
@jglosses @jgor @jgto @jgincreasing @jgreceivables @jgand @jginventories @jgrelative @jgto @jgsales,
@jga @jgtrend @jgdenoting @jgpoor @jgmanagement @jgof @jgcurrent @jgassets.
d. I @jgdon’t @jgthink @jgthere @jgis @jgnecessarily @jgany @jgcause @jgfor @jgconcern. @jgIt @jgappears
@jgcompany @jgC @jgis @jga @jgmature, @jgslow-growth @jgcompany @jgthat @jgis @jgreturning
@jgits @jgunneeded @jgoperating @jgcash @jgflows @jgto @jginvestors @jgin @jgthe @jgform @jgof
@jgdebt @jgrepayment, @jgshare @jgrepurchase, @jgdividends, @jgor @jgsome @jgcombination
@jgof @jgthese. @jgThis @jgis @jga @jgperfectly @jgviable @jgstrategy @jgin @jgthe @jgabsence @jgof
@jgattractive @jginvestment @jgopportunities.
14. @jgSee @ j g suggested @ j g solutions @ j g to @ j g Excel @ j g problems @ j g at @ j g McGraw-Hill’s
@ j g Connect @ j g or @ j g at @jgwww.mhhe.com/Higgins13e.
