Class 2 Notes

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29 Sep 2011
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Class 2 - Accounting Statements and Cash Flow
A firm has the following financial statements
Income statement for 2006 (‘000’s)
Net sales 1,000
COGS 400
Gross Margin 600
Selling 150
Administration 100
EBITDA 350
Depreciation 50
EBIT 300
Interest 40
EBT 260
Tax (25%) 65
NI 195
Div 50
Retained Earnings 145
Balance Sheet (‘000’s)
December 31, 2005 December 31, 2006
Assets
Cash 25 ???
Accounts Receivable 100 125
Inventory 75 65
Total Current Assets 200 ???
Capital Assets 400 500
Accumulated Depreciation (150) ???
Net Capital Assets 250 ???
Total Assets 450 ???
Liabilities
Accounts Payable 100 120
Total Current Liabilities 100 120
Long Term Debt 150 100
Retaining Earnings 200 ???
Total of Liabilities + Equity 450 ???
a) Fill in all the ??? in the Balance Sheet above, and find the cash balance on December 31,
2006.
b) Calculate the: Operating Cash Flow = NI + Dep. - Inc. AR - Inc. Inv + Inc. AP + I(1-T)
c) Calculate the Total Cash Flow = Free Cash Flow (FCF) = Operating cash flow – Capital
Expenditures
d) Verify that Δ Cash account = FCF – financial cash flows
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