MS In Accounting & Finance

Calculating Additions to NWC [LO4] The 2008 balance sheet of Saddle Creek, Inc., showed current assets of $2,100 and current liabilities of $1,380. The 2009 balance sheet showed current assets of $2,250 and current liabilities of $1,710. What was the company’s 2009 change in net working capital, or NWC?

Calculating OCF [LO4] So Long, Inc., has sales of $27,500, costs of $13,280, depreciation expense of $2,300, and interest expense of $1,105. If the tax rate is 35 percent, what is the operating cash fl ow, or OCF?

Cash Flow to Creditors [LO4] The 2008 balance sheet of Maria’s Tennis Shop, Inc., showed long-term debt of $2.6 million, and the 2009 balance sheet showed long-term debt of $2.9 million. The 2009 income statement showed an interest expense of $170,000. What was the fi rm’s cash fl ow to creditors during 2009?

Cash Flow to Stockholders [LO4] The 2008 balance sheet of Maria’s Tennis Shop, Inc., showed $740,000 in the common stock account and $5.2 million in the additional paid-in surplus account. The 2009 balance sheet showed $815,000 and $5.5 million in the same two accounts, respectively. If the company paid out $490,000 in cash dividends during 2009, what was the cash fl ow to stockholders for the year?

Calculating Total Cash Flows [LO4] Given the information for Maria’s Tennis Shop, Inc., in Problems 11 and 12, suppose you also know that the fi rm’s net capital spending for 2009 was $940,000, and that the fi rm reduced its net working capital investment by $85,000. What was the fi rm’s 2009 operating cash fl ow, or OCF?

Marginal versus Average Tax Rates [LO3] (Refer to Table 2.3 .) Corporation Growth has $88,000 in taxable income, and Corporation Income has $8,800,000 in taxable income. a. What is the tax bill for each fi rm? b. Suppose both fi rms have identifi ed a new project that will increase taxable income by $10,000. How much in additional taxes will each fi rm pay? Why is this amount the same?

Net Income and OCF [LO2] During 2009, Raines Umbrella Corp. had sales of $730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $580,000, $105,000, and $135,000, respectively. In addition, the company had an interest expense of $75,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is Raines’s net income for 2009? b. What is its operating cash fl ow? c. Explain your results in ( a ) and ( b ).

Accounting Values versus Cash Flows [LO4] In Problem 19, suppose Raines Umbrella Corp. paid out $25,000 in cash dividends. Is this possible? If spending on net fi xed assets and net working capital was zero, and if no new stock was issued during the year, what do you know about the fi rm’s long-term debt account?

Calculating Cash Flows [LO2] Dahlia Industries had the following operating results for 2009: sales $22,800; cost of goods sold $16,050; depreciation expense $4,050; interest expense $1,830; dividends paid $1,300. At the beginning of the year, net fi xed assets were $13,650, current assets were $4,800, and current liabilities were $2,700. At the end of the year, net fi xed assets were $16,800, current assets were $5,930, and current liabilities were $3,150. The tax rate for 2009 was 34 perce...

Net Fixed Assets and Depreciation [LO4] On the balance sheet, the net fi xed assets (NFA) account is equal to the gross fi xed assets (FA) account (which records the acquisition cost of fi xed assets) minus the accumulated depreciation (AD) account (which records the total depreciation taken by the fi rm against its fi xed assets). Using the fact that NFA FA  AD, show that the expression given in the chapter for net capital spending, NFA end  NFA beg D (where D is the depreciation expense du...