Question

Problems

1. Use the income statement and balance sheet shown below to develop the statement of cash flows.

Revenues	$5,700.00
COGS	$4,560.00
Gross Profit	$1,140.00
Operating Expenses	$500.00
Depreciation	$27.00
EBIT	$613.00
Interest Expense	$35.00
EBT	$578.00
Taxes	$231.20
NI	$346.80
Dividends	$0.00
ARE	$346.80

Balance sheet

	Year T+1	Year T
Cash and Equivalents	$714.80	$120.00
Accounts receivable	$500.00	$500.00
Inventory	$300.00	$340.00
Total Current Assets	$1514.80	$960.00
Fixed Assets	$660.00	$800.00
Accumulated Depreciation	$227.00	$200.00
Net Fixed Assets	$433.00	$600.00
Total Assets	$1947.80	$1560.00
Accounts Payable	$320.00	$300.00
Short – term Notes Payable	$40.00	$50.00
Accruals	$11.00	$10.00
Total Current Liabilities	$371.00	$360.00
Long-term Debt	$780.00	$750.00
Total liabilities	$1,151.00	$1,110.00
Common Stock	$120.00	$120.00
Retained Earnings	$676.80	$330.00
Total Shareholder’s equity	$796.80	$450.00
Total Liabilities & Shareholder’s Equity	$1,947.80	$1,560.00

2. From the financial statements shown in problem 1, calculate the AFNWC.
3. From the financial statements shown in Problem 1, calculate g* (for year T+1). Assuming revenues of $5,050 in year t, how does this value compare to the realized growth in revenues between the years T and +1?

Answer 1

1 Answer: Šummarized the data given in the tables provided in the question, Statement of Cash flow, Statement of Cash flow for the year "Tt1' Operations NI $34680 Add Depreciation $27.00 Accounts receivable $0.00 Inventory $ 40.00 Accounts payable $ 20.00 Accuoals $ 1.00 Cash flow foom operation. $434.50 Investing PP & E $140.00 cash flow from investing $140.00 financing short term notes payable $16.00) Long tesm debt! $30.00 $0.00 cash flow from financing $20.00 Cash $594.80 Beginning Cash ci Cash equivalent $120.com equivalent $714.00 Dividends Ending Cash & cash

from the financial statements shown in problem - 1 calculating AfNuc. AfNWC = Increase in Account receivable - Increase in Inventory. Increase Accounts payable. $ 0-$40)-$20 = $20 ☺ Net profit margin net profit Sales $346.80 $5,700 6.089%. Dividend payout = $0/$346.80 0.7

Retentioncratio - 1 - dividend payout < Gatio 1-0 1 Debt Equity ratio = Total liabilities Equity $1,151 211.44 $796.80 Asset Total assets Sales cales $1,947.80 0:34 $ 5,700 * Growth sate for the year T+ 1 = {net profit x Retention * (l- dobtequity ratio) margin / Cassets/ Sales)-(net poafit margin x tretention fatio x (1 + Debt equity raty}] = $6.086 XIX (1+1.4.433/.0.34-26.05% XIX 1+1-44)3] 7.7401 *Realized Gooooth rate - {$5,700 - $5,050) $ 5,050 12.87·1. Realized growth rate is better.
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