AFM101 Chapter Notes - Chapter 3: Operating Expense

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cyanbat359

24 Dec 2015

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM101

Professor

Jiye Li

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AFM101 Full Course Notes

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Chapter 3: operating decisions and the statement of earnings. The operating cycle (cash to cash cycle): the time it takes for a company to pay cash to suppliers, sell /s to customers, and collect cash from customers. Periodicity assumption: the long life of a company can be reported in shorter time periods, such as months, quarters, and years. 3 major sections: results of continuing operations, results of discontinued operations. Net earnings (sum of 1 and 2: earnings per share. Continuing operations: section presents the results of continuing operations. Operating revenues: increases in assets or settlements of liabilities from ongoing operations of the business. Operating expenses: decreases in assets or increases in liabilities from ongoing operations and are incurred to generate revenues during the period. Expenditure is any outflow of cash for any purpose. Expense will result when an asset is used to generate revenue during a period. Primary operating expense: cost of sales: cost of products sold to customers.

Related Questions

Using the Amazon Financial Analysis (FY 2011 â FY 2008) and KeyRatio Comparison, calculate the missing values. (Enter youranswers in thousands of dollars. Round your answers to 2 decimalplace. Omit the "$" & "%" signs in your response.)

Amazon Financial Analysis
(data inthousands [000s], excluding per share data and financialratios)		FY2012
Revenue	$	61,093,000
Costof Revenue		44,271,000

Gross Profit

Gross Profit Margin

EBIT		672,000
Income Tax		428,000
NOPAT (Net Operating Profit After Taxes)		244,000
NetIncome (includes discontinued operations)	$	(39,000)


Diluted Weighted Average Shares		453,000
Dividends per Share		-
Diluted Normalized EPS (continuing operations)		(0.09)

Cash Cycle		FY2012
Revenue per day
Accounts Receivable		2,600,000
Receivable Days
Inventory		6,031,000
Inventory Days
Accounts Payable		13,318,000
Payable Days

Cash Cycle (days)		()


Key Ratios		FY2012
Market Value of Book Equity
Price per share*		250.87
Earnings per share (continuing operations)		()
P/ERatio		()
Return on Invested Capital		0.01
Return on Assets		()
Return on Equity		()
Return on Revenue		()
Total Assets		32,555,000
Current Assets		21,296,000
Current Liabilities		19,002,000
Current Ratio
Total Liabilities
Liabilities/Equity Ratio
Total Equity (book value)		8,192,000.0
Shareholders' Equity (minority interests)		-
Market to Book Value

Per Employee		FY2012
Number of Employees (continuing operations)		88.4
Revenue
NetIncome		()
Market Value

*Stock price obtained from Yahoo Finance at close of final dayof FY

fuchsiabeetle10

Missing Amounts from Financial Statements

The financial statements at the end of Atlas Realty's firstmonth of operations follow:

Required:

Analyze the interrelationships among the four financialstatements and enter the missing amounts. If an amount is zero,enter "0".

AtlasRealty
IncomeStatement
For the MonthEnded May 31, 2018
Fees earned		$400,000
Expenses:
Wages expense	$
Rent expense	48,000
Supplies expense	17,600
Utilities expense	14,400
Miscellaneous expense	4,800
Total expenses		288,000
Net income		$

AtlasRealty
RetainedEarnings Statement
For the MonthEnded May 31, 2018
Retained earnings, May 1, 2018		$
Net income	$
Dividends
Change in retained earnings
Retained earnings, May 31, 2018		$

AtlasRealty
BalanceSheet
May 31,2018
Assets
Cash		$123200
Supplies		12,800
Land
Total assets		$
Liabilities
Accounts payable		$48,000
Stockholdersâ Equity
Common stock	$
Retained earnings
Total stockholders' equity
Total liabilities and stockholdersâequity		$

Use the minus sign to indicate cash outflows, decreases in cash,and cash payments.

AtlasRealty
Statement ofCash Flows
For the MonthEnded May 31, 2018
Cash flows from operating activities:
Cash received from customers	$
Cash payments for expenses and payments tocreditors	-252,800
Net cash flows from operatingactivities		$
Cash flows from investing activities:
Cash payments for acquisition of land		-120,000
Cash flows from financing activities:
Cash received from issuing commonstock	$160,000
Cash dividends	-64,000
Net cash flows from financingactivities
Net increase (decrease) in cash and May 31,2018, cash balance		$

limeworm408

Income statements and balance sheets follow for The New YorkTimes Company. Refer to these financial statements to answer therequirements.

The New York Times Company Consolidated Statements of Income

	Fiscal year ended
(in thousands)	Dec. 29, 2013	Dec. 30, 2012
Operating revenues
Circulation	$ 824,277	$ 795,037
Advertising	666,687	711,829
Other	86,266	88,475
Total revenues	1,577,230	1,595,341
Production Costs
Raw materials	92,886	106,381
Wages and benefits	332,085	331,321
Other	201,942	213,616
Total production costs	626,913	651,318
Selling, general and administrative expenses	706,354	711,112
Depreciation and amortization	78,477	78,980
Total operating costs	1,411,744	1,441,410
Pension settlement expense	3,228	47,657
Multiemployer pension plan withdrawal expense	6,171	0
Other expense	0	2,620
Operating profit	156,087	103,654
Gain on sale of investments	0	220,275
Impairment of investments	0	5,500
(Loss)/income from joint ventures	(3,215)	2,936
Premium on debt redemption	0	0
Interest expense, net	58,073	62,808
Income from continuing operations before income taxes	94,799	258,557
Income tax expense	37,892	94,617
Income from continuing operations	56,907	163,940
Discontinued operations:
(Loss) from discontinued operations, net of tax	(20,413)	(113,447)
Gain on sale, net of tax	28,362	85,520
Income/(loss) from discontinued operations, net of tax	7,949	(27,927)
Net income/(loss)	64,856	136,013

Net (income)/loss attributable to the noncontrollinginterest	249	(166)
Net income/(loss) attributable to New York Times Company commonstockholders	65,105	135,847

The New York Times Company Consolidated Balance Sheets
	As of
(in thousands)	Dec. 29, 2013	Dec. 30, 2012

Cash and cash equivalents	$ 482,745	$ 820,490
Short-term investments	364,880	134,820
Accounts receivable, net	202,303	197,589
Deferred income taxes	65,859	58,214
Prepaid assets	20,250	23,085
Other current assets	36,230	26,320
Assets held for sale	0	137,050
Total current assets	1,172,267	1,397,568
Long-term marketable securities	176,155	4,444
Investments in joint ventures	40,213	40,872
Property plant and equipment, net	713,356	773,469
Goodwill, net	125,871	122,691
Deferred income taxes	179,989	302,212
Miscellaneous assets	164,701	166,214
Total assets	$2,572,552	$2,807,470

Accounts payable	$ 90,982	$ 88,990
Accrued payroll and other related liabilities	91,629	86,772
Unexpired subscriptions	58,007	57,336
Accrued expenses	107,755	118,753
Accrued incomes taxes	138	38,932
Liabilities held for sale	0	32,373
Total current liabilities	348,511	423,156

Long-term debt and capital lease obligations	684,142	696,752
Pension benefits obligation	444,328	737,889
Postretirement benefits obligation	90,602	110,347
Other	158,435	173,690
Total other liabilities	1,377,507	1,718,678

Stockholdersâ equity
Common stock of $0.10 par value:

Class A common stock	15,129	15,027
Class B convertible	82	82
Additional paid-in capital	33,045	25,610
Retained earnings	1,283,518	1,230,450
Common stock held in treasury, at cost	(86,253)	(96,278)
Accumulated other comprehensive income loss), net of tax	(402,611)	(512,566)
Total New York Times Company stockholdersâ equity	842,910	662,325
Noncontrolling interest	3,624	3,311
Total stockholdersâ equity	846,534	665,636
Total liabilities and stockholdersâ equity	$2,572,552	$2,807,470

Required:

a. Compute net operating profit after tax (NOPAT)for 2013 and 2012. Assume that combined federal and state statutorytax rates are 37% for both years.

b. Compute net operating assets (NOA) for 2013 and2012.

c. Compute return on net operating assets (RNOA)for 2013 and 2012. Net operating assets are $412,630 thousand in2011.

d. Compute return on common shareholders equity(ROE) for 2013 and 2012. Stockholdersâ equity attributable to NewYork Times Company in 2011 is $506,360 thousand.

e. What is nonoperating return component of ROE for2013 and 2012?

f. Comment on the difference between ROE and RNOA.What inference do you draw from this comparison?

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AFM101 Chapter Notes - Chapter 3: Operating Expense

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