FIN 300 Chapter Notes - Chapter 2: Operating Cash Flow, Fixed Asset, Cash Flow

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indigospider592

16 Oct 2011

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It is a convenient means of organizing and summarizing what a firm owns( its assets), what a firm owes ( its liabilities), and the difference between the two ( the firm"s equity) at a given time. A fixed asset is one that has a relatively long life. Accountants refer to these assets as capital assets. Current assets have a life of less than one year. Liabilities and owners equity: the right hand side. Current liabilities have a life of less than one year. Bond and bondholders refer to long term debt and long term creditors. The difference between the total value of the assets (current and fixed) and the total value of the liabilities (current and long term) is the shareholders equity aka common equity or owners equity. Difference between a firms current assets and its current liabilities is called net working capital.

Related Questions

1.)Company ABC has sales of $1,650,000, cost of goods sold of$600,000, EBIT of $450,000, interest expense of $70,000, and a taxrate of 27%. If the company paid $57,000 in dividends what is theaddition to retained earnings.

2.)At the beginning of the year, a firm had current assets of$121,306 and current liabilities of $124,509. At the end of theyear, the current assets were $122,418 and the current liabilitieswere $103,718. What is the change in net working capital?

3.)

Use the Income Statement and Balance Sheet below to calculatethe companies free cash flow.

Income Statement	2017
Net Sales	675
Cost of goods sold	210
Depreciation	50
EBIT	415
Interest Paid	15
EBT	400
Taxes (30%)	120
Net Income	280
Dividends	105
Addition to Retained Earnings	175

Assets	2016	2017	Liabilities and Shareholders equity	2016	2017
Current Assets			Current Liabilities
Cash	100	125	Accounts Payable	200	250
Accounts Receivable	250	350	Notes Payable	150	225
Inventory	400	375
Total Current Assets	750	850	Total Current Liabilities	350	475
			Long term debt	300	250
Fixed Assets			Stockholders equity
PPE	1500	1700	Common stock	300	300
Accumulated Depreciation	400	450	Retained earnings	900	1075
Net PPE	1100	1250	Total Shareholderâs Equity	1200	1375
Total Assets	1850	2100	Total Liabilities & Equity	1850	2100

4.)A firm has net working capital of $900. Long-term debt is$4,200, total assets are $8,000, and fixed assets are $4,300. Whatis the amount of the total liabilities?

beigedeer979

Consider the following balance sheet:

Assets

Current Assets:

Cash $2737

Net premiums receivalbe 821

Supplies 387

Total current assets $3945

Net property and equipment $5924

Total assets $9869

Liabilities and Net Assets

Accounts payble-medical service $2145

Accrued expenses 929

NOtes payable 382

Total current liabilities $3456

Long-term debt $4295

Total Liabilities $7751

Net assets-unrestricted (equity) $2118

Total liabilities and net assets $9869

a. What is net working capital for 2011?

b. What is the debt ratio?

Wims, Inc., has current assets of $4,000, net fixed assets of$23,100, current liabilities of $2,500, and long-term debt of$12,400. a. What is the value of the shareholdersâ equity accountfor this firm? (Do not round intermediate calculations.) b. Howmuch is net working capital? (Do not round intermediatecalculations.)

lavendermammoth179

FIN 300 Chapter Notes - Chapter 2: Operating Cash Flow, Fixed Asset, Cash Flow

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