Financial Accounting: Tools for Business Decision Making, 8th Edition
8th Edition
ISBN: 9781118953808
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3.4EYCT
(a)
To determine
Financial statement:
The financial statement records and shows all the financial status of the business. The financial statement consists of the balance sheet, income statement, statement of
To describe: The advantages and disadvantage of having no long-term debt.
(b)
To determine
The advantages and disadvantages of having large cash balance.
(c)
To determine
To describe: The balance in the accounts payable.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Gibraltar Industries is a New York-based manufacturer of high-value-added steel products. In a recent year, it reported the following activities:
Acquisitions (Investments in other companies) ($8,724.00)
Decrease in inventories $1,770.00
Depreciation and Amortization $33,907.00
Long-Term Debt Reduction ($105,507.00)
Net Cash provided by operating activities $107,874.00
Net income $24,068.00
Net proceeds from issuance of common stock $250.00
Net proceeds from sale of property and equipment $2,692.00
Payment of dividends ($5,985.00)
Proceeds from long-term debt $53,439.00
Proceeds from sale of other equity investments $34,701.00
Purchase of property, plant, and equipment ($21,595.00)
Required:
1. Based on this information, present the cash flows from investing and financing activities section of the cash flow statement.
• Last year, J&H Corp. reported a book value of $700 million in current assets, of which 15% is cash, 17% is short-term investments,
and the rest is accounts receivable and inventory.
• The company reported $595.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no
notes payable claims last year. There were no changes in the accounts payables during the reporting period.
• The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,120 million
in long-term assets last year.
Income Statement For the Year Ended on December 31 (Millions of dollars)
J&H Corp.
$1,500
1,200
60
Net sales
Operating costs, except depreciation and amortization
Depreciation and amortization
Total operating costs
Operating income (or EBIT)
Less: Interest
Earnings before taxes (EBT)
Less: Taxes (40%)
Net income
1,260
$240
24
$216
86
$130
Industry Average
$1,875
1,500
75
1,575
$300
45
$255
102
$153
Based…
5
Rebecky's Flowers 4U, Inc., had free cash flows during 2021 of $41 million, NOPAT of $81 million, and depreciation of $19 million. Using
this information, fill in the blanks on Rebecky's balance sheet below. (Enter your answers in millions of dollars.)
Assets
Current assets
Cash and marketable securities
Accounts receivable
Inventory
Total
Fixed assets
Gross plant and equipment
Less: Depreciation
Net plant and equipment
Other long-term assets
Total
Total assets
$
s
2021
$
s
$
$
REBECKY'S FLOWERS 4U, INC.
Balance Sheet as of December 31, 2021 and 2020
(in millions of dollars)
2020
32 $
68
132
252 $
510 S
89
421 S
60
481
733
$
$
29
78
113
220
Liabilities and Equity
Current liabilities.
Accrued wages and taxes
Accounts payable
Notes payable
Total
Long-term debt
460 Stockholders' equity
70
390
60 Retained earnings
450
Total
670 Total liabilities and equity
Preferred stock (5 million shares)
Common stock and paid-in surplus (10 million shares)
$
S
5
$
2021
22 $
95
5 $
2020
20
232
257 S…
Chapter 3 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
Ch. 3 - Prob. 1QCh. 3 - Can a business enter into a transaction that...Ch. 3 - Are the followingevents recorded in the accounting...Ch. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Misty Reno, a beginning accounting student,...Ch. 3 - Prob. 9QCh. 3 - What is the normal balance for each of these...
Ch. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - Prob. 14QCh. 3 - Prob. 15QCh. 3 - (a) When entering a transaction in the journal,...Ch. 3 - (a) Should accounting transaction debits and...Ch. 3 - Journalize these accounting transactions. (a)...Ch. 3 - Prob. 19QCh. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - Prob. 22QCh. 3 - Prob. 3.1BECh. 3 - Prob. 3.2BECh. 3 - Prob. 3.3BECh. 3 - For each of the following accounts, indicate the...Ch. 3 - Prob. 3.5BECh. 3 - Prob. 3.6BECh. 3 - Prob. 3.7BECh. 3 - Tilton Corporation has the following transactions...Ch. 3 - Prob. 3.9BECh. 3 - Selected transactions for Montes Company are...Ch. 3 - Prob. 3.11BECh. 3 - Prob. 3.12BECh. 3 - Prob. 3.1DIECh. 3 - Prob. 3.2DIECh. 3 - Prob. 3.3DIECh. 3 - Prob. 3.4DIECh. 3 - Prob. 3.5DIECh. 3 - Prob. 3.1ECh. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Prob. 3.6ECh. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Prob. 3.10ECh. 3 - Prob. 3.11ECh. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Prob. 3.20ECh. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.1APCh. 3 - Prob. 3.2APCh. 3 - Prob. 3.3APCh. 3 - Prob. 3.4APCh. 3 - Prob. 3.5APCh. 3 - Prob. 3.6APCh. 3 - Prob. 3.7APCh. 3 - Prob. 3.8APCh. 3 - Prob. 3.9APCh. 3 - Prob. 3.10APCh. 3 - Prob. 3.11APCh. 3 - Prob. 3.1EYCTCh. 3 - Prob. 3.2EYCTCh. 3 - Prob. 3.3EYCTCh. 3 - Prob. 3.4EYCTCh. 3 - Prob. 3.6EYCTCh. 3 - Prob. 3.7EYCTCh. 3 - Prob. 3.8EYCTCh. 3 - Prob. 3.9EYCTCh. 3 - Prob. 3.11EYCTCh. 3 - Prob. 3.1IFRS
Knowledge Booster
Similar questions
- Novak Corp.'s net income for the current year was $622000. Depreciation recorded on plant assets was $93000. Accounts receivable and inventories increased by $49000 and $20000, respectively. Supplies and accounts payable decreased by $2000 and $39000, respectively. A $500,000 convertible bond was retired through the issuance of common stock. How much cash was provided by operating activities?arrow_forwardWhat amount should be reported as net cash provided by operating 1 po activities? Kollar Corporation reported net income of P6,500,000 for the current year. Changes in certain accounts during the current year are: Investment in Gold shares carried on the equity basis Accumulated depreciaiton, cause by major repair to equipment Unearned interest income Premium on bonds payable 380,000 increase 210,000 decrease 50,000 decrease 120,000 decrease Deferred tax liability 180,000 increase Your answerarrow_forwardAn analysis of the annual financial statements of Conner Corporation reveals the following:a. The company had a $5 million extraordinary loss from insurance proceeds received due to atornado that destroyed a factory building.b. Depreciation for the year amounted to $8 million.c. During the year, $2 million in cash was transferred from the company’s checking account intoa money market fund.d. Accounts receivable from customers increased by $4 million over the year.e. Cash received from customers during the year amounted to $167 million.f. Prepaid expenses decreased by $1 million over the year.g. Dividends declared during the year amounted to $7 million; dividends paid during the yearamounted to $6 million.h. Accounts payable (to suppliers of merchandise) increased by $2.5 million during the year.i. The liability for accrued income taxes payable amounted to $5 million at the beginning of theyear and $3 million at year-end.In the computation of net cash flows from operating activities by…arrow_forward
- A. Income StatementAt the end of the last year, King Power Company achieved $6 million in income (EBITDA). Depreciation expense was $1.2 million, interest expense was $800,000 and the corporate tax rate was 35%. At the end of the fiscal year the company had current assets totaling $12 million, $4 million in accounts payable, $1.5 million in accrued liabilities, $1.3 million in other payables, and $8 million in property, plant, and equipment. Assume that King Power has no excess cash, uses debt and equity to finance its operations, has no current liabilities, and recognizes depreciation periodically. Determine the company's net income or loss. Explain how this result can help the manager in making decisions in the company.2. Calculate net and operating working capital. Explain the difference between the two results.3. If the company had $6 million in property, plant, and equipment in the previous year and net operating working capital remained constant, what is the company's available…arrow_forwardCox Corporation recently reported an EBITDA of $58 million and $10 million of net income. The company has $13 million interest expense and the corporate tax rate is 40.0% percent. What was the company's depreciation and amortization expense? (Answers are in $ millions.) $35.00 $45.00 $48.00 $28.33 $53.00arrow_forwardMcEwen mining recently reported $130000 off sales$68500 of operating cost other than depreciation and $10200 off depreciation. The company has $20000 of outstanding bonds that carry a 6% interest rate and its tax rate was 35%. what was the firms net incomearrow_forward
- In its most recent fiscal year, Boba Tea Corp reported net income of $300,000,000. Looking at its financial statements, we observe that the firm reported depreciation expenses of $125,000,000 and capital expenditures of $150,000,000. The firm had no debt but did experience an increase in NWC of $20,000,000. What is Boba Tea's free cash flow? Select one: O a. $170 million b. $255 million c. $150 million d. $5 million Clear my choice-arrow_forwardQuantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars): Sales Operating costs (excluding depreciation) EBITDA Depreciation $4,280.00 3,021.00 $1,259.00 315.00 $944.00 150.00 $ 794.00 198.50 595.50 Looking ahead to the following year, the company's CFO has assembled this information: EBIT Interest EBT Taxes (25%). Net income Year-end sales are expected to be 6% higher than $4.28 billion in sales generated last year. ▪ Year-end operating costs, excluding depreciation, are expected to increase at the same rates as sales. Depreciation costs are expected to increase at the same rate as sales. Interest costs are expected to remain unchanged. ▪ The tax rate is expected to remain at 25%. On the basis of this information, what will be the forecast for Edwin's year-end net income? Enter your answers as positive values. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round…arrow_forwardABC Corp is a manufacturing company with the following information: 1. Financial Statements: • Net Income: $10 million • Depreciation: $5 million • Capital Expenditures (CapEx): $8 million • Changes in Working Capital: $2 million (increase) 2. Balance Sheet: Total Debt: $40 million (long-term debt). Total Equity: $60 million • Total Assets: $100 million 3. Market Information: • Risk - Free Rate: 3% • Market Risk Premium: 5%. Comparable Companies' Unlevered Beta: 1.0 (average of industry peers) • Tax Rate: 30% . Current Stock Price: $25 per share • Number of Shares Outstanding: 4 million 4. Assumptions: • Terminal Growth Rate: 5%. Long-term WACC: 0.25% less than the initial WACC Questions: a. Calculate the Free Cash Flow to the Firm (FCFF) for ABC Corp for the next five years. b. Determine the Cost of Equity using the Capital Asset Pricing Model (CAPM) with unlevered beta.c. Calculate the Levered Beta for ABC Corp by using the industry average unlevered beta and the company's capital…arrow_forward
- King Lyon has the following assets: Current assets Capital assets Total assets $3,280,000 8,150,000 $11,430,000 During 4 months of the year, current assets drop to $1,650,000 (total assets will then be $9,800,000). Its operating profit (EBIT) is expected to be $499,500. Its tax rate is 30 percent. Shares are valued at $20. Its capital structure is short-term financing at 3 percent and long-term financing of 30 percent equity, 70 percent debt at 4 percent. a. Calculate expected EPS if the firm is perfectly hedged. (Do not round intermediate calculations and round your final answer to 2 decimal places.) EPS $arrow_forward• The consolidated balance sheets for the Landon Lumber Company at the beginning and end of 2009 follow. The company bought $50 million worth of fixed assets. The charge for depreciation in 2009 was $10 million. Net income was $33 million, and the company paid out $5 million in dividends. a. Fill in the amount of the source or use in the appropriate column. LANDON LUMBER COMPANY: BALANCE SHEET AT BEGINNING AND END OF 2009 (Millions of Dollars) Cash Marketable Securities Net Receivables Inventories Total current assets Gross fixed assets Less accumulated depreciation Net fixed assets Total assets Accounts Payable Notes Payable Other Current Liabilities Long-term debt Common Stock Retained Earnings Total Liabilities and equity Notes: Total sources must equal total uses. b. Prepare a statement of cash flows c. Briefly summarize your findings. Jan. 1 $7 0 30 53 $ 90 S Jan. 1 75 25 $50 $140 $ 18 3 15 8 29 67 $140 Dec. 31 Source $ 15 11 3=2 22 75 $ 123 $ 15 Dec. 31 Source 125 35 $ 90 $213 1…arrow_forwardDollar Inc. recently reported operating income (EBIT) of $3.25 million, depreciation of $0.56 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled $0.37 million. How much was its free cash flow, in millions? $2.36 $1.93 $2.03 $2.14 $2.25arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education