Question

(Interpreting financial statements and measuring cash flows) Given the information for Pamplin Inc. in the hyperlinks below: a. How much is the firm's net working capital and operating working capital, and what is the debt ratio for 2008? b. Complete a common-sized income statement and a common-sized balance sheet for 2008. c. Compute free cash flows and financing cash flows for 2008. Interpret your results. Pamplin Inc Balance Sheet at 12/31/2007 and 12/31/2008 Pamplin Inc. Income Statement for Years Ending 12/31/2007 and 12/31/2008 a. How much is the firm's net working capital and operating working capital, and what is the debt ratio for 2008? The net working capital is $0 (Round to the nearest dollar.) The operating working capital is $ 1 (Round to the nearest dollar.) The debt ratio is (Round to three decimal places.) b. Complete a common-sized income statement and a common-sized balance sheet for 2008. Interpret your results, Common-sized income statement Sales $1,446 % (Round to one decimal place.) Cost of goods sold $847 0% (Round to one decimal place.) Gross profit $599 % (Round to one decimal place.) Selling, general and administrative expenses $42 [% (Round to one decimal place.) Depreciation $245 % (Round to one decimal place.) Operating income $312 % (Round to one decimal place.) Interest expense % (Round to one decimal place.) Net income before taxes $252 0% (Round to one decimal place.) Taxes (40%) $101 1% (Round to one decimal place.) Net income $ 151 0% (Round to one decimal place.) $60 Common-sized balance sheet ASSETS Enter your answer in the edit fields and then click Check Answer

Answer 1

Step : 1 of 5

a) Net working capital for 2007:

Current assets - current liabilities = 1200 - 200 = $1000

Net working capital of 2008 :

Current assets - current liabilities = 1200 - 298 = $ 902

Debt ratio = Total debt / total assets

For 2007,

= 600/2400

= 25 percent

For 2008,

= 600/2607

= 23.01 percent
Slepic of s Common Size income statement: Pompin Inc. Income statements at 12/31 lot and 12/31108 2007 2008 Sales Cost of Goods sold 58.33 58.52 Gooss profit Saq Selling and general administ active 30 forse 270 so 20.83 245 287 19.84 Depreciation 21.57 o operating Income 312 250 20.83 so Go Infasest opponse 200 16.67 252 Not income before tax G G7 80 6.98 101 fates ISI 10.44 Not income Interpoolection: 1. Net Income arrived has been increased from last year to current year.