Question

You have the following financial information about Berkeley Automobile Compa information to answer the following questions 2019 Berkeley Automobile Company Inc. (000's) 2018 Sales $ 9,500 $ 14,000 Net Fixed Assets $ 10,800 $ 9,650 Inventory $ 3,100 $ 4,513 Cost of Goods Sold $ 6,900 $ 9,242 Interest $ 300 $ 390 Cash $ 575 $ 550 Common Stock (APIC) $ 2,500 $ 2,500 Depreciation $ 375 $ 355 Accounts Receivable $ 1,600 $ 4,891 Accounts Payable $ 2,400 $ 3,750 Long-Term Debt $ 3,500 $ 4,145 Tax Rate 34% 34% Dividends $ 824 $ 1,115 Common Shares Outstanding 200 200 Book Value Per Share $ 50.88 $ 58.54 Price / Earnings Multiple (PE) 10 All balance sheet items are as of 12/31 of that year All income statement items are for the entire year indicated Please comnlete the asset nortion of the balance sheet for Berke

Answer 1

Dividend Payout Ratio
This ratio is the amount of dividend given by the company out of its total earnings of the year to its shareholders
Formula		Dividend Per Share
		Earnings Per Share
Given Case
Earnings for the company is
		2018	2019
Sales		9500	14000
Less
Cost of Goods Sold		6900	9242
Interest		300	390
Depreciation		375	355
		7575	9987
EBT		1925	4013
Less : Taxes	34%	654.5	1364.42
Total Earnings After Tax		1270.5	2648.58
Dividend		824	1115
Dividend Payout Ratio		65%	42%
Plow Back Ratio
It is ratio of earnings retained by the company after paying dividend
Formula		1 - dividend payout ratio
		(or)
		Retained earnings after divdend
		Total Earnings
In Given Case
Plowback Ratio		35%	58%
Operating Cash Flow for year 2019
It is cash flow genrated from regular operations of company
Indirect method to calculate is to start from Net profit and add all non cash expenses like depreciation, deferred tax etc.
Then adjust it for increase or decrease in working capital
In Given case
Net Profit as above		2648.58
Add : Depreciation		355
(A)		3003.58
Changes in Current assets
Less
Inventory		-1413
Accounts receivable		-3291
Increase in CA (B)		-4704
Changes in Current Liabilities
Accounts Payable		1350
Incease In CL ©		1350
Net Operating Cash Flow (A+B+C)		-350.42
Net Capital Spending for the year 2019
It is the spending made by company during the year on fixed assets by company
Formula
Fixed assets at end of year -Fixed assets at the beginning of year + Depreciation for the year
In given case
FA at end of year		9650
FA at Beginning of year		10800
		-1150
Deprectiation for the year		355
Net Spending for year		-795
It means company has sold fixed assets during the year more than buying during the year