Student_Ch03_FOF8e (1).xlsx

8/20/2019 Student_Ch03_FOF8e (1).xlsx

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1

CHAPTER 3 NEW PROBLEMS

UNDERSTANDING FINANCIAL STATEMENTS

AND CASH FLOW

3-1.

WORKING WITH INCOME STATEMENT

DATA

Net incoe !"#$%$$$

S&'(e) o*t)t'n+in, #$%$$$

Solution

E'(nin,) e( )&'(e !3.$

3-".

WORKING WITH INCOME STATEMENT

DATA

S'/e) !"%$$$

Co)t o0 ,oo+) )o/+ !"$$%$$$

Gene('/ 'n+ '+ini)t('tie e2en)e) !"%$$$

De(eci'tion e2en)e) #%$$$

Inte(e)t e2en)e 1"%$$$

Incoe t'2e) 45%"$$

Solution

Incoe St'teent 'n+ Coon-Si6e+ Incoe St'teent7

S'/e) !"%$$$

Co)t o0 Goo+) )o/+ "$$%$$$

G(o)) P(o0it) 3"%$$$

Gene('/ 8 A+in e2en)e) "%$$$

De(eci'tion e2en)e #%$$$

Tot'/ oe('tin, e2en)e 5$%$$$

Oe('tin, incoe 9EBIT: "%$$$

Inte(e)t e2en)e 1"%$$$

E'(nin,) ;e0o(e t'2e) "


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2

3-3.

WORKING WITH BALANCE SHEET

DATA

C')& $%$$$

Acco*nt (ecei';/e) ';/e !1$%$$

Acco*nt) '>';/e "3%$$$

Tot'/ c*((ent /i';i/itie) 33%$$

Lon,-te( +e;t "$$%$$$

Tot'/ Li';i/itie) "33%$$

Coon Stoc?


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3

Net Wo(?in, C'it'/ !1$


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4

3-5.

WORKING WITH INCOME STATEMENT AND BALANCE SHEET

DATA

S'/e) !$%$$$

Acc**/'te+ +e(eci'tion 14$%$$$

C')& @

Co)t o0 ,oo+) )o/+ !3"$%$$$

Acco*nt (ecei';/e) 53%$$$

De(eci'tion e2en)e) 3#%$$$

Acco*nt) '>';/e %$$$

Inte(e)t e2en)e "%$$$

S&o(t-te( note) '>';/e "4%$$$Incoe t'2e) 4%#$

Inento(ie)


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5

Acco*nt) (ecei';/e 53%$$$

Inento(> ! 51"%$$

Net Wo(?in, C'it'/ !1';/e) ';/e 1%$$$

Inc(e')e in ,(o)) 0i2e+ '))et)


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6

Solution

C')& F/o) 0(o Oe('tin, Actiitie)

Net Incoe !1"4%$$$

A+*)tent)7

De(eci'tion 15%$$$

Inc(e')e in 'cco*nt) (ecei';/e 94%$$$:

Inc(e')e in inento(ie) 95%$$$:

Inc(e')e in 'cco*nt '>';/e 0in'ncin, 'ctiitie) !


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7

Oe('tin, incoe !


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Net prot margin .2% 9.6%

(. Comparison of a!an(e seets an' assettosa!es re!ationsips

Time Warner

2009 2010

$a!es 25&3 26&

Tota! assers 66&059 66&524

$a!estoassets 0.3 0.40

3-A1

COMPUTING FREE ANDE FINANCING CASH FLOWS

DATA

inc(e')e in inento(ie) ! 3"Oe('tin, incoe "1

Dii+en+) "

Inc(e')e in ACCOUNTS PAABLE


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9

F(ee c')& 0/o) ! ';/e !#%$$$ !4$%$$$

Acc(*e+ /i';i/itie) !#%$$$ !3%$$$

Tot'/ c*((ent /i';i/itie) !13%$$$ !13%$$$

Mo(t,',e '>';/e !5$%$$$ !$

Tot'/ +e;t !""3%$$$ !13%$$$

P(e0e((e+ )toc? !$ !1"$%$$$

Coon )toc? !"$%$$$ !"$%$$$

Ret'ine+ e'(nin,) !


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10

Se//in,% ,ene('/ 8 '+ini)t('tie 9ent o0 /on,-te( +e;t -5$%$$$

Inc(e')e in (e0e((e+ )toc? 1"$%$$$

P(e0e((e+ )toc? +ii+en+) -1$%$$$

Coon )toc? +ii+en+) -""%$$$

Fin'ncin, c')& 0/o) ! 1


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11

C')& !"$$ !1$

Acco*nt) Recei';/e Coon )toc? 4$$ 4$$

Ret'ine+ e'(nin,) 5$$ #$$

Tot'/ one() e*it> 1%$$ 1%5$$

Tot'/ /i';i/itie) 'n+ one() e*it> !"%


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12

Step 2: Calculate the change in the net working capital

1"31"$11 1"31"$1"

C*((ent '))et) !1%"$$ !1%"$$

C*((ent /i';i/itie) "$$ 1$

Net o(?in, c'it'/ !1%$$$ !1%$$

Step 3: Compute the change in fixed and other assets

C&'n,e in ,(o)) 0i2e+ '))et) !


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13

1$$.$=

3#.1=

1.4=

11.#=

1.=

13.3=


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14


15/131

15

".=

.=

.5=

13.#=41.=

5.


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16


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17

-


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1

"$$4 "$1$

100.0% 100.0%

56.1% 55.9%

43.9% 44.1%

23.9% 22.%

1.1% 1.0%

1.3% 0.2%

26.3% 23.9%


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19

17.6% 20.2%

4.6% 4.4%

0.3% 1.2%

12.% 14.6%

4.5% 5.0%

.2% 9.6%

% Cange

0.2% 0.4%

2.6% 14.7%

1.4% 16.5%

"$$4 "$1$

100.0% 100.0%

79.7% 77.%

20.3% 22.2%

5.9% 5.2%

14.4% 17.0%

1.3% 1.1%

2.5% 1.5%

15.7% 17.4%

5.7% 6.1%

10.0% 11.3%

% Cange

1.9% 9.4%

2.6% 17.%

1.3% 13.5%

Wa!t "isne#

2009 2010

20.3% 22.2%

14.4% 17.0%

)n(rease+"e(rease,

)n(rease+"e(rease,


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20

10.0% 11.3%

Wa!t "isne#

2009 2010

36&149 3&063

63&117 69&206

0.57 0.55


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21

c&'n,e

!11%$$$

!%$$$

9!1"%$$$:

!$

!%$$$

!53%$$$

9!"%$$$:

!


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22


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23


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24

C&'n,e)

!$

9!$:

9!$:


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CHAPTER 3 PROBLEMS

UNDERSTANDING FINANCIAL STAT

AND CASH FLOW

3-1.

REIEW OF FINANCIAL STATEMENTS

DATA

Inento(>

Gene('/ 'n+ '+in. E2en)e)

Coon Stoc?

C')&

Oe('tin, e2en)e)

Note) '>';/e

Inte(e)t e2en)e

De(eci'tion e2en)e

Net S'/e)

Acco*nt) (ecei';/e

Acco*nt) '>';/e

Lon,-Te( De;t

Co)t o0 Goo+) )o/+

B*i/+in,) 'n+ E*ient

Acc**/'te+ De(eci'tion

T'2e)

Ret'ine+ e'(nin,)

Solution

Incoe St'teent7

S'/e)

Co)t o0 Goo+) )o/+

G(o)) P(o0it

Gene('/ 8 A+in e2en)e) #$

De(eci'tion e2en)e $$Tot'/ oe('tin, e2en)e

Oe('tin, incoe 9EBIT:

Inte(e)t e2en)e

E'(nin,) ;e0o(e t'2e)

T'2e) 9


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B'/'nce S&eet7

C')&

Acco*nt) (ecei';/e

Inento(>

Tot'/ c*((ent '))et)

B*i/+in,) 'n+ e*ient


Net ;*i/+in,) 'n+ e*ient

Tot'/ '))et)

Acco*nt) '>';/e

Note) '>';/e

Tot'/ c*((ent /i';i/itie)

Lon,-te( +e;tTot'/ Li';i/itie)

Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>

Tot'/ /i';i/itie) 'n+ e*it>

3-2#

COMPUTING CASH FLOWS

DATA

Inc(e')e in 'cco*nt) (ecei';/e

Inc(e')e in inento(ie)

Oe('tin, Incoe

Inte(e)t E2en)e

Inc(e')e in 'cco*nt) '>';/e

Dii+en)

Inc(e')e in coon )toc?

Inc(e')e in net 0i2e+ '))et)

De(eci'tion E2en)e

Incoe t'2e)

Be,innni, c')&

Solution


Net Incoe


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A+*)tent)7

De(eci'tion



Inc(e')e in 'cco*nt '>';/e

Net C')& (oi+e+ ;> oe('tin, 'ctiite)

C')& F/o) 0(o Ine)tin, Acititie)


C')& F/o) 0(o Fin'ncin, Acititie)


Dii+en)

Net c')& (oi+e+ ;> 0in'ncin, 'ctiitie)

Dec(e')e in C')&

Be,innin, C')&

En+in, c')&

Net Incoe oe('tin, incoe J inte(e)t e2en)e J incoe t'2e)

T&e c&'n,e in ,(o)) 0i2e+ '))et) i) e*'/ to t&e c&'n,e in net 0i2e+ '))et) 9!"3:

+e(eci'tion e2en)e 0o( t&e >e'( o0 !1"% (e)*/tin, in ' c&'n,e in ,(o)) 0i2e+ '))et)

3-3.


DATA

De(eci'tion e2en)e

C')&

Lon,-Te( De;t

Net S'/e)

Acco*nt) '>';/e

Gene('/ 'n+ '+in. E2en)e)

B*i/+in,) 'n+ E*ient

Note) '>';/e

Acco*nt) (ecei';/e

Inte(e)t e2en)e

Acc(*e+ e2en)e)

Coon Stoc?


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Co)t o0 Goo+) )o/+

Inento(>

T'2e)


P(e'i+ e2en)e)

T'2e) '>';/e

Ret'ine+ e'(nin,)

Solution

Incoe St'teent7

S'/e)

Co)t o0 Goo+) )o/+

G(o)) P(o0it)

Gene('/ 8 A+in e2en)e) 54%$$$

De(eci'tion e2en)e %$$$Tot'/ oe('tin, e2en)e


Inte(e)t e2en)e


T'2e) 9

P(e'i+ e2en)e)


G(o)) B*i/+in,) 'n+ e*ient


Net 0i2e+ '))et)

Tot'/ '))et)

Note) '>';/e

Acco*nt) '>';/e

T'2e) '>';/e

Acc(*e+ e2en)e)


Lon,-te( +e;t

Tot'/ Li';i/itie)


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Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>


A:

Net Wo(?in, C'it'/

De;t R'tio

B:

Coon-Si6e+ Incoe St'teent7

S'/e) !53%$$$

Co)t o0 Goo+) )o/+ "45%$$$

G(o)) P(o0it) "5%$$$

Gene('/ 8 A+in e2en)e) 54%$$$De(eci'tion e2en)e %$$$

Tot'/ oe('tin, e2en)e 1';/e 3%$$$

Acc(*e+ e2en)e) 5%4$$

Tot'/ c*((ent /i';i/itie) "35%4$$

Lon,-te( +e;t 33


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Tot'/ Li';i/itie) 51%4$$

Coon Stoc? "#4%$$$

Ret'ine+ e'(nin,) ""%4$$

Tot'/ e*it> 1%4$$

Tot'/ /i';i/itie) 'n+ e*it> 1%1"3%#$$

3-';/e

Inte(e)t e2en)e

De(eci'tion e2en)e

Inc(e')e in ;'n? +e;tInc(e')e in 'cc(*e+ e2en)e)


Incoe t'2e)

Solution


Net Incoe

A+*)tent)7

De(eci'tion




Inc(e')e in 'cc(*e+ e2en)e)




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Inc(e')e in ;'n? +e;t

Dii+en)


Inc(e')e in c')&


P(o;/e 3- +oe) not &'e ' n*e(ic'/ )o/*tion.

3-%#INTERPRETING FINANCIAL STATEMENTS AND MEASURING CASH FLO

DATA

A))et)7 "$$4

C')& !"$$

Acco*nt) Recei';/e $

C*((ent '))et) 1%"$$

P/'nt 'n+ e*ient "%"$$

Le))7 'cc**/'te+ +e(eci'tion 91%$$$: Net /'nt 'n+ e*ient 1%"$$

Tot'/ '))et) !"%7 "$$4

Acco*nt) '>';/e !"$$

Note) '>';/e--c*((ent 94=: -

C*((ent /i';i/itie) "$$

Bon+) $$

One() e*it>

Coon )toc? 4$$

Ret'ine+ e'(nin,) 5$$

Tot'/ one() e*it> 1%$$



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S'/e) !1%"$$

Co)t o0 ,oo+) )o/+ 5$$

G(o)) (o0it $$

Oe('tin, e2en)e) 3$

De(eci'tion ""$

Net oe('tin, incoe "$

Inte(e)t e2en)e $

Net incoe ;e0o(e t'2e) "$$

T'2e) 9 "

C*((ent '))et) 1%"$$

P/'nt 'n+ e*ient "%$$

Le))7 'cc**/'te+ +e(eci'tion 91%"$$:

Net /'nt 'n+ e*ient 1%


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Li';i/itie) 'n+ E*it>7 "$1$

Acco*nt) '>';/e !1$

Note) '>';/e--c*((ent 94=: 1$

C*((ent /i';i/itie) 3$$

Bon+) $$

One() e*it>

Coon )toc? 4$$

Ret'ine+ e'(nin,) #$$

Tot'/ one() e*it> 1%5$$

Tot'/ /i';i/itie) 'n+ one() e*it> !"%$$


Net Incoe

A+*)tent)7

De(eci'tion Dec(e')e in 'cco*nt) (ecei';/e


Dec(e')e in 'cco*nt '>';/e



Inc(e')e in /'nt 'n+ e*ient


Inc(e')e in note) '>';/e Dii+en)


Net Dec(e')e in c')&

C')&% 'n*'(>1% "$1$

C')&% Dece;e( 31% "$1$

3-

INTERPRETING FINANCIAL STATEMENTS AND MEASURING CASH FLO

DATA

B'/'nce S&eet7 "$$4

C')& !1%$$$

M'(?et';/e Sec*(itie) %$$$

Recei';/e)


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P(e'i+ e2en)e) 1%"$$

Tot'/ c*((ent '))et) 11%"$$

G(o)) /'nt 'n+ e*ient 31%$$$

Le))7 'cc**/'te+ +e(eci'tion 93$%$$$:

Tot'/ '))et) !';/e 1%$$$

Tot'/ c*((ent /i';i/itie) 4%$$$

Lon,-te( +e;t 1$%$$$

Coon )toc? 15"%"$$

Tot'/ /i';i/itie) 'n+ e*it> !


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De(eci'tion 3$%$$$

Inc(e')e in '(?et';/e )ec*(itie) 9"$$:

Dec(e')e in 'cco*nt) (ecei';/e 4%$$$

P(e'i+ E2en)e) 1$$

Inc(e')e in inento(ie) 9/e)) AP: 9"';/e !4%$$$

Acc(*'/) 9!1%$$$:

Note) '>';/e 9!"%$$$:

Tot'/ c*((ent /i';i/itie) !%$$$

Lon,-te( +e;t 9!1$%$$$:

Coon )toc? !11%1$$

Tot'/ /i';i/itie) 'n+ e*it> !5%1$$


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3-'#

MEASURING CASH FLOWS

DATA

A;('&') M'n*0'ct*(in, Co'n> B'/'nce S&eet

At 1"31"$$4 'n+ 1"31"$1$

A))et)7 "$$4

C')& !#4%$$$

Acco*nt) Recei';/e 11"%$$$

P(e'i+ e2en)e) 1$%$$$

Tot'/ c*((ent '))et) "5%$$$

G(o)) /'nt 'n+ e*ient "3#%$$$

Acc**/'te+ De(eci'tion 9 Incoe St'teent

Fo( t&e e'( En+e+ 1"31"$1$

S'/e) 9'// c(e+it:

Le))7 co)t o0 ,oo+) )o/+

G(o)) (o0it)

Le))7 oe('tin, e2en)e)

Gene('/ 'n+ '+ini)t('tie


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Net incoe ''i/';/e to coon )toc?&o/+e()

1. T&e on/> ent(> in t&e 'cc**/'te+ +e(eci'tion 'cco*nt i) 0o( "$1$ +e(eci'tion

". Coon )toc? +ii+en+) 0o( "$1$ ""%$$$

Solution

St'teent o0 C')& F/o)


Net Incoe "';/e %$$$

Dec(e')e in 'cc(*e+ /i';i/itie) 9%$$$: Net c')& (oi+e+ 0(o oe('tin, 'ctiitie)

C')& F/o) 0(o Ine)tin, Actiitie)

Inc(e')e in ,(o)) /'nt 'n+ e*ient 953%$$$:

Net c')& *)e+ 0o( ine)tin, 'ctiitie)

C')& F/o) 0(o Fin'ncin, Actiitie)

Dec(e')e in o(t,',e '>';/e 95$%$$$:

Inc(e')e in (e0e((e+ )toc? 1"$%$$$

Dii+en+) 9""%$$$:

Net c')& (oi+e+ 0(o 0in'ncin, 'ctiitie)

Net inc(e')e in c')& 11%$$$

C')&% 'n*'(> 1% "$1$ #4%$$$

C')&% Dece;e( 31% "$1$ !1$$%$$$

3-1(#

CORPORATE INCOME TA

S'/e)

Co)t o0 Goo+) So/+ 'n+ Oe('tin, E2en)e)

Oe('tin, Incoe

Ot&e( T'2';/e Incoe 'n+ E2en)e)7

Inte(e)t E2en)e


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Tot'/ T'2';/e Incoe

T'2 Co*t'tion7

T'2 ('te) Incoe

1= ! $%$$$

"= "%$$$

3


39/131

G(o)) P(o0it

Oe('tin, E2en)e)

C')& oe('tin, e2en)e)

De(eci'tion

Oe('tin, Incoe


Inte(e)t E2en)e

Tot'/ T'2';/e Incoe

T'2 Co*t'tion

T'2 ('te) Incoe

1= ! $%$$$

"= "%$$$

3


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A))et)7

C')& 8 e*i'/ent) !"3%$1"

Acco*nt) (ecei';/e) #%14

Inento(ie) 1#%"""

Ot&e( c*((ent '))et) 1$%##$

Tot'/ c*((ent '))et) 1"$%33

G(o)) /'nt% (oe(t> 8 e*ient 153%33

Acc**/'te+ +e(eci'tion 4%1

Net /'nt% (oe(t> 8 e*ient 55%45"

Ine)tent) -

Int'n,i;/e) -

Ot&e( '))et) 1"%33

Tot'/ '))et) !3"3%4#

Li';i/itie)7Acco*nt) '>';/e Stoc? 911%4$":

Coon e*it> 11#%


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Se//in,% ,ene('/% 'n+ '+ini)t('tie e2en)e) " ite) 9 8 e*ient 153%33

Acc**/'te+ +e(eci'tion 4%1

Net /'nt% (oe(t> 8 e*ient 55%45"

Ine)tent) -

Int'n,i;/e) -

Ot&e( '))et) 1"%33


42/131

Tot'/ '))et) !3"3%4#

Li';i/itie)7

Acco*nt) '>';/e ! 8 e*ient


43/131

Tot'/ c*((ent /i';i/itie) 5%3"3

Lon, te( note) 33%3#<

Ot&e( /on,-te( /i';i/itie) 55%"5$

Tot'/ Li';i/itie) 1#%455

Coon )toc? 4 !1ot'

G(o)) (o0it))'/e) "3.#=

Oe('tin, (o0it))'/e) #.=

Net Incoe)'/e) .=

C:

T&i) *e)tion +oe) not &'e ' n*e(ic'/ )o/*tion

D:


F:



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MENTS

%$$

#$


45/131

!1%$

4%$$

%$$

3"%$

1""%$$$

3


46/131

1"

9":

93$:

"

!1

9!3:

!"$

9!1:

!

9!1:

"$

!

/*) t&e

o0 !3.

-

%$$$

""%$$$

33


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"45%$$$

44%3$$

$%$$

"3%$$$

1


48/131

"#4%$$$

""%4$$

1%4$$

!1%1"3%#$$

!"3%4$$

$.4=

1$$.$=

1.#=


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$.4=

".5=

"3.


50/131

9!:

!"5

!


51/131

!1%


52/131

.#=

.#=

11.=

"3.1=

3


53/131

1%1$$ 9!1$$:

13#%3$$ !"3%1$$

33$%$$$ !1


54/131

!


55/131

"$1$

!1$$%$$$

5$%$$$

1$$%$$$

1$%$$$

"#$%$$$

311%$$$

9%$$$:

!"%$$$

"$1$

!4$%$$$

3%$$$

13%$$$

$

1"$%$$$

"$%$$$


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"


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!$$%$$$

T'2e)

! 5%$$

%"$

1


58/131

! 1%$$$%$$$

9


59/131

!3$%3# !5%35< !"%4 !1


60/131

4.= "%#$< 1".3=

.5= 1%""1 5.3=

#.= 9ot'

$# "$$4

5.1= !3$%3# 1$.3=

"1.1= 5%1#1 14.3=

.= 1


61/131

1$$.$= !"4%#5 1$$.$=

1


62/131

$.= 5%533 #3."=

"".


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C&'n,e


78/131

9!1"%#4$:

9!1%4


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CHAPTER 3 PROBLEMS

UNDERSTANDING FINANCIAL STATEMENTS

AND CASH FLOW

3-1.WORKING WITH INCOME STATEMENT

DATA

Net incoe !"#$%$$$

S&'(e) o*t)t'n+in, #$%$$$

Solution

E'(nin,) e( )&'(e

3-".WORKING WITH INCOME STATEMENT

DATA

S'/e) !"%$$$

Co)t o0 ,oo+) )o/+ "$$$$$

Gene('/ 'n+ '+ini)t('tie e2en)e) "$$$

De(eci'tion e2en)e) #%$$$

nte(e)t e2en)e 1"%$$$

ncoe t'2e) 45%"$$

Solution

ncoe St'teent 'n+ Coon-Si6e+ Incoe St'teent7

S'/e)

Co)t o0 Goo+) )o/+

G(o)) P(o0it)

Gene('/ 8 A+in e2en)e)

De(eci'tion e2en)e

Tot'/ oe('tin, e2en)e


nte(e)t e2en)e


T'2e) 9


83/131

DATA

C')& $%$$$

Acco*nt (ecei';/e) ';/e

Acco*nt) '>';/e


Lon,-te( +e;t

Tot'/ Li';i/itie)

Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>Tot'/ /i';i/itie) 'n+ e*it>

Net Wo(?in, C'it'/

De;t R'tio

3-


84/131

DATA

C')& 3$%$$$

Acco*nt (ecei';/e) 3%#$$

Acco*nt) '>';/e "%$$

S&o(t-te( note) '>';/e 11%$$$

nento(ie) %$$$

G(o)) 0i2e+ '))et) 1%$1%$$$

Acc**/'te+ +e(eci'tion #%$$$

Lon,-te( +e;t "1$%$$$

Coon )toc?

3-.


DATA

nento(> %$$

Gene('/ 'n+ '+in. E2en)e) #$

Coon Stoc?


85/131

C')& 1%$

Oe('tin, e2en)e) 1%3$

Note) '>';/e $$

nte(e)t e2en)e 4$$

De(eci'tion e2en)e $$

Net S'/e) 1"%#$$

Acco*nt) (ecei';/e 4%$$

Acco*nt) '>';/e


B*i/+in,) 'n+ e*ient

Acc**/'te+ De(eci'tion Net ;*i/+in,) 'n+ e*ient

Tot'/ '))et)

Acco*nt) '>';/e

Note) '>';/e


Lon,-te( +e;t


86/131

Tot'/ Li';i/itie)

Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>


3-.


DATA

De(eci'tion e2en)e !%$$$

C')& ""%$$$

Lon,-Te( De;t 33';/e 1$"%$$$

Gene('/ 'n+ '+in. E2en)e) 54%$$$

B*i/+in,) 'n+ E*ient #4%$$$

Note) '>';/e 5%$$$

Acco*nt) (ecei';/e 13%$$$

nte(e)t e2en)e 44%3$$

T'2e) $%$$

Acc**/'te+ De(eci'tion "3%$$$P(e'i+ e2en)e) 1';/e 3%$$$

Ret'ine+ e'(nin,) ""%4$$

Solution

ncoe St'teent7

S'/e)

Co)t o0 Goo+) )o/+

G(o)) P(o0it)

Gene('/ 8 A+in e2en)e)De(eci'tion e2en)e



nte(e)t e2en)e


T'2e) 9


87/131

B'/'nce S&eet7

C')&

Acco*nt) (ecei';/e

nento(>

P(e'i+ e2en)e)




Net 0i2e+ '))et)

Tot'/ '))et)

Note) '>';/e

Acco*nt) '>';/e

T'2e) '>';/e

Acc(*e+ e2en)e)


Lon,-te( +e;t

Tot'/ Li';i/itie)

Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>


A:

Net Wo(?in, C'it'/ De;t R'tio

B:

Coon-Si6e+ Incoe St'teent7

S'/e)

Co)t o0 Goo+) )o/+

G(o)) P(o0it)


De(eci'tion e2en)e

Tot'/ oe('tin, e2en)eOe('tin, incoe 9EBIT:

nte(e)t e2en)e


T'2e) 9


88/131

C')&

Acco*nt) (ecei';/e

nento(>

P(e'i+ e2en)e)




Net 0i2e+ '))et)

Tot'/ '))et)

Note) '>';/e

Acco*nt) '>';/e

T'2e) '>';/e

Acc(*e+ e2en)e)


Lon,-te( +e;t

Tot'/ Li';i/itie)

Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>


3-5.

WORKING WITH INCOME STATEMENT AND BALANCE SHEET

DATAS'/e) !$%$$$

Acc**/'te+ +e(eci'tion 14$%$$$

C')& @

Co)t o0 ,oo+) )o/+ 3"$%$$$

Acco*nt (ecei';/e) 53%$$$

De(eci'tion e2en)e) 3#%$$$

Acco*nt) '>';/e %$$$

nte(e)t e2en)e "%$$$

S&o(t-te( note) '>';/e "4%$$$

ncoe t'2e) 4%#$nento(ie)


89/131

Solution

ncoe St'teent7

S'/e)

Co)t o0 Goo+) )o/+

G(o)) P(o0it)


De(eci'tion e2en)e



nte(e)t e2en)e


T'2e) 9


G(o)) B*i/+in,) 'n+ e*ientAcc**/'te+ De(eci'tion

Net 0i2e+ '))et)

Ot&e( '))et)

Tot'/ '))et)

Acco*nt) '>';/e

Note) '>';/e


Lon,-te( +e;t

Tot'/ Li';i/itie)Coon Stoc?

Ret'ine+ e'(nin,)

Tot'/ e*it>


Net Wo(?in, C'it'/

De;t R'tio


90/131

3-


DATA

nc(e')e in 'cco*nt) (ecei';/e "

nc(e')e in inento(ie) 3$

Oe('tin, Incoe 5

nte(e)t E2en)e "

nc(e')e in 'cco*nt) '>';/e "

Dii+en+) 1

nc(e')e in coon )toc? "$

nc(e')e in net 0i2e+ '))et) "3

De(eci'tion E2en)e 1"

ncoe t'2e) 15

Be,innin, c')& "$

Solution


Net Incoe

A+*)tent)7

De(eci'tion




Net C')& (oi+e+ ;> oe('tin, 'cti'te)





Dii+en+)


Dec(e')e in C')&

Be,innin, C')&

En+in, c')&


91/131

3-4.

STATEMENT OF CASH FLOWS

No co*t'tion) (e*i(e+.

3-1(#


DATA

Dii+en+) !"

nc(e')e in coon )toc? "5

nc(e')e in 'cco*nt) (ecei';/e

nc(e')e in inento(ie)

Oe('tin, incoe "1

nc(e')e in 'cco*nt) '>';/e


92/131

Dii+en+)


nc(e')e in c')&

Be,innin, c')&

En+in, c')&


P(o;/e 3-11 +oe) not &'e ' n*e(ic'/ )o/*tion.

3-12#

MEASURING CASH FLOWS

DATA

A;('&') M'n*0'ct*(in, Co'n> B'/'nce S&eet

At 1"31"$11 'n+ 1"31"$1"

A))et)7 "$11 "$1"

C')& !#4%$$$ !1$$%$$$

Acco*nt) Recei';/e 11"%$$$ 1$$%$$$

P(e'i+ e2en)e) 1$%$$$ 1$%$$$

Tot'/ c*((ent '))et) "5%$$$ "#$%$$$

G(o)) /'nt 'n+ e*ient "3#%$$$ 311%$$$

Acc**/'te+ De(eci'tion 9


93/131

Gene('/ 'n+ '+ini)t('tie

Inc(e')e in 'cco*nt) '>';/e

Dec(e')e in 'cc(*e+ /i';i/itie)

Net c')& (oi+e+ 0(o oe('tin, 'ctiitie)


Inc(e')e in ,(o)) /'nt 'n+ e*ient

Net c')& *)e+ 0o( ine)tin, 'ctiitie)


Dec(e')e in o(t,',e '>';/e

Inc(e')e in (e0e((e+ )toc?

P(e0e((e+ )toc? +ii+en+)

Coon )toc? +ii+en+)Net c')& (oi+e+ 0(o 0in'ncin, 'ctiitie)

Net inc(e')e in c')&

C')&% 'n*'(> 1% "$1"

C')&% Dece;e( 31% "$1"

3-13.


94/131

WORKING WITH STATEMENT OF CASH FLOWS

DATA

nc(e')e in inento(ie) !5%$$$

Oe('tin, incoe "14%$$$

Dii+en+) "4%$$$

nc(e')e in 'cco*nt) '>';/e) ';/e 1%$$$

nc(e')e in ,(o)) 0i2e+ '))et) ';/eNet C')& (oi+e+ ;> oe('tin, 'ctiitie)




Inc(e')e in note) '>';/e

Inc(e')e in /on,-te( +e;t

I))*e+ ne coon )toc?

Dii+en+)Net c')& (oi+e+ ;> 0in'ncin, 'ctiitie)


Be,innin, c')&

En+in, c')&


95/131

3-14#

NTERPRETING FINANCIAL STATEMENTS AND MEASURING CASH FLOWS

DATA

A))et)7 "$11 "$1"

C')& !"$$ !1$

Acco*nt) Recei';/e 1%$$ 1%5$$



96/131

Coon-Si6e+ Incoe St'teent7 "$1"

S'/e)

Co)t o0 ,oo+) )o/+

G(o)) (o0it

Oe('tin, e2en)e)

De(eci'tion

Oe('tin, incoe

nte(e)t e2en)e


T'2e) 9

C*((ent '))et)

P/'nt 'n+ e*ient

Le))7 'cc**/'te+ +e(eci'tion

Net /'nt 'n+ e*ient

Tot'/ '))et)

Li';i/itie) 'n+ E*it>7 "$1"

Acco*nt) '>';/e

Note) '>';/e--c*((ent 94=:C*((ent /i';i/itie)

Bon+)

One() e*it>

Coon )toc?

Ret'ine+ e'(nin,)

Tot'/ one() e*it>

Tot'/ /i';i/itie) 'n+ one() e*it>


Net IncoeA+*)tent)7

De(eci'tion

Dec(e')e in 'cco*nt) (ecei';/e


Dec(e')e in 'cco*nt '>';/e

Net C')& (oi+e+ ;> oe('tin, 'cti'te)


97/131




Inc(e')e in note) '>';/e

Dii+en+)



C')&% 'n*'(>1% "$1"

C')&% Dece;e( 31% "$1"

3-1$#

NTERPRETING FINANCIAL STATEMENTS AND MEASURING CASH FLOWS

DATA

B'/'nce S&eet7 "$11 "$1"

C')& !1%$$$ !1 1%$$$ #';/e 1%$$$ 13%$$$

Tot'/ c*((ent /i';i/itie) 4%$$$ 5%$$$

Lon,-te( +e;t 1$%$$$ 1$%$$$

Coon )toc? 15"%"$$ 1#3%3$$

Tot'/ /i';i/itie) 'n+ e*it> !


98/131

Tot'/ Oe('tin, 'n+ inte(e)t e2en)e) 5$%$$$

E'(nin,) ;e0o(e t'2e) 5$%$$$

Le))7 T'2e) "5%1$$

Net incoe ''i/';/e to coon )toc?&o/+e()


99/131

M'(?et';/e Sec*(itie)

Recei';/e)

nento(>

P(e'i+ e2en)e)


Net 0i2e+ '))et)

Tot'/ '))et)

Acco*nt) '>';/e

Acc(*'/)

Note) '>';/e


Lon,-te( +e;t

Coon )toc?


3-1)#

CORPORATE INCOME TA

S'/e) ! 3%$$$%$$$

Co)t o0 Goo+) So/+ 'n+ Oe('tin, E2en)e) 9"%1$$%$$$:

Oe('tin, Incoe


Inte(e)t E2en)e 9

3-1%#

CORPORATE INCOME TA

S'/e) ! %$$$%$$$

Co)t o0 Goo+) So/+ 9"%$$$%$$$:


100/131

G(o)) P(o0it)

Oe('tin, E2en)e) 91%$$$%$$$:

Oe('tin, Incoe


Inte(e)t Incoe ! "$%$$$

Inte(e)t E2en)e 91$$%$$$:

Tot'/ T'2';/e Incoe

T'2 Co*t'tion

T'2 ('te) Incoe T'2e)

= )*(t'2 0o( incoe ;eteen !1$$%$$$ 'n+ !33%$$$

=T'2 Li';i/it>

3-1#.

CORPORATE INCOME TA

S'/e) ! 3%$$$%$$$

Co)t o0 Goo+) So/+ 9"%$$$%$$$:

G(o)) P(o0it

Oe('tin, E2en)e)C')& oe('tin, e2en)e) 9


101/131

MINI CASE

'. Co'(i)on o0 (o0it '(,in) 0(o "$$4 to "$1$

Tie W'(ne(

"$$4 "$1$

S'/e) !"%3## !"%###

Co)t o0 ,oo+) )o/+ 1


102/131

G(o)) (o0it '(,in

Oe('tin, (o0it '(,in

Net (o0it '(,in

;. Co'(i)on o0 (o0it '(,in) ;eteen Tie W'(ne( 'n+ W'/t Di)ne>

Tie W'(ne(

"$$4 "$1$

G(o)) (o0it '(,in

Oe('tin, (o0it '(,in

Net (o0it '(,in

c. Co'(i)on o0 ;'/'nce )&eet) 'n+ '))et-to-)'/e) (e/'tion)&i)

Tie W'(ne(

"$$4 "$1$S'/e) ! "%3## ! "%###

Tot'/ '))et) ! %$4 ! %"<

S'/e)-to-'))et)

APPENDI SOLUTIONS

3-A1

COMPUTING FREE ANDE FINANCING CASH FLOWS

DATA

nc(e')e in inento(ie) ! 3"

Oe('tin, incoe "1

Dii+en+) "

nc(e')e in ACCOUNTS PAABLE


103/131

C&'n,e in net oe('tin, o(?in, c'it'/

nc(e')e in inento(ie)

nc(e')e in 'cco*nt) (ecei';/e

nc(e')e in ot&e( c*((ent '))et)

nc(e')e in 'cco*nt) '>';/e

C&'n,e in net oe('tin, o(?in, c'it'/

nc(e')e in 0i2e+ '))et)

F(ee c')& 0/o)

Fin'ncin, c')& 0/o)

nte(e)t e2en)e

Dii+en+)

nc(e')e in coon )toc?

Fin'ncin, c')& 0/o)

3-A"

NTERPRETING CASH FLOWS

No *'ntit'tie )o/*tion

3-A3

COMPUTING FREE AND FINANCING CASH FLOWS

DATA

"$11 "$1"

C')& !#4%$$$ !1$$%$$$Acco*nt) (ecei';/e ! !11"%$$$ !1$$%$$$

P(e'i+ e2en)e) !1$%$$$ !1$%$$$

Tot'/ c*((ent '))et) !"5%$$$ !"#$%$$$

G(o)) 0i2e+ '))et) !"3#%$$$ !311%$$$

Acc**/'te+ +e(eci'tion 9!';/e !#%$$$ !4$%$$$Acc(*e+ /i';i/itie) !#%$$$ !3%$$$

Tot'/ c*((ent /i';i/itie) !13%$$$ !13%$$$

Mo(t,',e '>';/e !5$%$$$ !$

Tot'/ +e;t !""3%$$$ !13%$$$

P(e0e((e+ )toc? !$ !1"$%$$$

Coon )toc? !"$%$$$ !"$%$$$

Ret'ine+ e'(nin,) !


104/131

Tot'/ e*it> !"$%$$$ !35"%$$$

Tot'/ +e;t 'n+ e*it> !


105/131

COMPUTING FREE CASH FLOWS AND FREE CASH FLOWS ANALSIS

DATA

A))et)7 "$11 "$1"

C')& !"$$ !1$

Acco*nt) Recei';/e 1%$$ 1%5$$



106/131

Step 2: Calculate the change in the net working capital

1"31"$11 1"31"$1"

C*((ent '))et)

C*((ent /i';i/itie)

Net o(?in, c'it'/

Step 3: Compute the change in fixed and other assets

C&'n,e in ,(o)) 0i2e+ '))et)

C&'n,e in ot&e( '))et)

C&'n,e in ,(o)) 0i2e+ 'n+ ot&e( '))et)

Step 4: rapping it up

A0te(-t'2 c')& 0/o) 0(o oe('tion)

Le)) ine)tent)7

ne)tent in net o(?in, c'it'/

ne)tent in ,(o)) 0i2e+ 'n+ ot&e( '))et)

F(ee c')& 0/o)

Cash flows distri!uted to in"estors

nte(e)t 'i+ to /en+e()

nc(e')e in note) '>';/e

Coon )toc? +ii+en+)nc(e')e in coon )toc?

Fin'ncin, c')& 0/o)


107/131


108/131


109/131


110/131


111/131


112/131


113/131


114/131


115/131


116/131


117/131


118/131


119/131


120/131


121/131


122/131

c&'n,e

9!1%$$$:

!"$$

9!4%$$$:

!33%$$$

9!1$$:

!"3%1$$

!1


123/131


124/131


125/131


126/131

"$$4 "$1$

1$$.$= 1$$.$=

.1= .4=


127/131

W'/t Di)ne>

"$$4 "$1$

W'/t Di)ne>

"$$4 "$1$! 3%1


128/131

c&'n,e

!11%$$$!%$$$

9!1"%$$$:

!$

!%$$$

!53%$$$

9!"%$$$:

!


129/131

!1""%$$$

!"%$$$


130/131


131/131

C&'n,e)

Documents

Student_Ch03_FOF8e (1).xlsx