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Published byEmanuel Footer Modified over 2 years ago

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Short Problems

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Short Problem 1 = Net sales + beg. A/R – end A/R = – =

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Short Problem 2 = net income add: depreciation decrease in assets loss on sale = = IOFOOIOFOO

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Short Problem 3 = book value – loss after insurance *Book value = acquisition cost – accumulated depreciation = – = =

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Short Problem 4a OIIOxFFOIIOxFF = treasury stock sale - dividends paid = = (provided)

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= sale of equipment – bond purchase = – = (used) Short Problem 4b

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Short Problem 5 OOOFOOOOFO = net income add: depreciation loss on bond retirement less: decrease in A/P decrease in amortization = – =

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= net income add: depreciation increase in ADA (dr DBE bad debts exp, cr ADA) decrease in prepaid rent (dr rent exp, cr prep rent) increase in A/P less: increase in A/R = – = Short Problem 6

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Short Problem 7a = cash barrowed from bank + issuance of stock + cash from B/P – paid dividends – paid bank loan = – = I & F I F I F O F

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Short Problem 7c = – purchase of real estate – purchase of patent – sale of securities = – – = – (used)

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Short Problems

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Short Problem 1 = Analysis Period Amount x 100 Base Period Amount = / = 120%

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Short Problem 2a Gross Margin Rate = Net Sales - CGS Net Sales = ( )/ = 4% Ave. Inventory = (Beg. Inv + End Inv)/2 = ( )/2 = Inventory TO = 4:1 = CGS/Ave Inv. = CGS/ *CGS = Ave. A/R = (Beg. A/R + End A/R)/2 = ( )/2 = A/R TO = 5:1 = Net Sales/Ave A/R = Net Sales/ *Net Sales =

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Short Problem 2b *Ave A/R = *Net Sales = Days’ Sales = (Ave. A/R / Net Sales ) x 365 = ( / ) x 365 = 73 days

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Short Problem 3a *Sales = Days’ Sales = 18 = (A/R / Net Sales ) x 360 *A/R = 50000

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Short Problem 3b Inventory TO = 9 = CGS/Inv. *Gross Margin Rate =.10 = (Net Sales – CGS) / Net Sales **CGS = Inv. TO = 9 = /Inv *Inv =

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Short Problem 4 Note: EBIT is earning before tax & income expense *Income before tax = Net Income/(1-tax rate) = 20000/(1-0.2) = *EBIT = Income before tax + interest expense = = Times interest earned = EBIT / interest expense = 35000/10000 = 3.5

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Short Problem 5 ROA = Net Income / Total Assets *PM =.20 ->.15 = Net Income / Net Sales *Asset TO = 1.5x -> 2.5x = Net Sales / Total Assets Du pont analysis: Old ROA = PM * Asset TO =.20 x 1.5 =.30 New ROA = PM * Asset TO =.15 x 2.5 =.375

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Short Problem 6 *Ave A/R = ( ) / 2 = A/R TO = 5.0 = Credit Sales / Ave. A/R **Credit Sales = Total Sales = Credit Sales + Cash Sales = =

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Short Problem 7 *Ave A/R = ( ) / 2 = A/R TO = Credit Sales / Ave. A/R = / = 8x

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Short Problem 9

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Net Income Margin =.12 = Net Income / Sales = Net Income / 1000 **Net Income = 120 ROA = 0.06 = Net Income / Assets = 120 / Assets **Assets = 2000 ROE =.10 = Net income / Common Equity = 120 / Common Equity *Common Equity = 1200 **Liability = Asset – Equity =

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*Tax Ratio = 0.4 = Tax Expense / Pre tax income *Tax Expense = 0.4(Pre tax income) Pre tax income = Net Income + Tax Expense = (Pretax income) 0.6(Pre tax income) = 120 *Pre tax income = 200 **Tax Expense = 0.4(Pre tax Income) = 0.4(200) = 80 *Operating Income = 1000 – 750 = 250 Pre tax income = 200 = Operating Income – Interest Exp = 250 – Interest Exp **Interest exp = 50 Total Expenses = Operating + Interest + Tax = = 880

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Short Problem

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Long Problem 1

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Operating Income

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Long Problem2

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Long Problem 3

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Long Problem 4

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Long Problem 5

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Long Problem 2

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Long Problem

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Long Problem 3

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Long Problem

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Long Problem 4

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Sales COGS(960000) Gross Profit Selling Exp(128000) Admin Exp(64000) EBITDA Int Exp(28000) Pre-tax Income Tax Exp(40000) Net Income60000

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ASSETS Cash80000 A/R Inventory Prepaid50000 Machinery & Equip Acc Dep(80000) TOTAL ASSETS LIABILITIES & EQUITY A/P % B/P Retained Earnings Common Stock (P5 par) TOTALLIAB & EQUITY

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