22 May Item 4 South Sea Baubles has the following (incomplete) balance sheet and income statement. ?? BALANCE ??SHEET AT END OF YEAR ? (Figures ??in
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Item 4
South Sea Baubles has the following (incomplete) balance sheet and income statement.
BALANCE SHEET AT END OF YEAR
(Figures in $ millions)
Assets
2018
2019
Liabilities and Shareholders' Equity
2018
2019
Current assets
$
104
$
210
Current liabilities
$
78
$
102
Net fixed assets
940
1,040
Long-term debt
670
890
INCOME STATEMENT, 2019
(Figures in $ millions)
Revenue
$
2,020
Cost of goods sold
1,100
Depreciation
420
Interest expense
254
a&b. What is shareholders’ equity in 2018 and 2019?
c&d. What is net working capital in 2018 and 2019?
e. What are taxes paid in 2019? Assume the firm pays taxes equal to 21% of taxable income.
f. What is cash provided by operations during 2019?
g. Net fixed assets increased from $940 million to $1,040 million during 2019. What must have been South Sea’s gross investment in fixed assets during 2019?
Complete this question by entering your answers in the tabs below.
· Req A and B
· Req C and D
· Req E
· Req F
· Req G
What is shareholders’ equity in 2018 and 2019? (Enter your answers in millions.)
2018
_______ million
2019
_____ million
Item4
Item 4
South Sea Baubles has the following (incomplete) balance sheet and income statement.
|
BALANCE SHEET AT END OF YEAR |
|||||||||||||
|
(Figures in $ millions) |
|||||||||||||
|
Assets |
2018 |
2019 |
Liabilities and Shareholders' Equity |
2018 |
2019 |
||||||||
|
Current assets |
$ |
104 |
|
$ |
210 |
|
Current liabilities |
$ |
78 |
|
$ |
102 |
|
|
Net fixed assets |
|
940 |
|
|
1,040 |
|
Long-term debt |
|
670 |
|
|
890 |
|
|
INCOME STATEMENT, 2019 |
|||
|
(Figures in $ millions) |
|||
|
Revenue |
$ |
2,020 |
|
|
Cost of goods sold |
|
1,100 |
|
|
Depreciation |
|
420 |
|
|
Interest expense |
|
254 |
|
a&b. What is shareholders’ equity in 2018 and 2019?
c&d. What is net working capital in 2018 and 2019?
e. What are taxes paid in 2019? Assume the firm pays taxes equal to 21% of taxable income.
f. What is cash provided by operations during 2019?
g. Net fixed assets increased from $940 million to $1,040 million during 2019. What must have been South Sea’s gross investment in fixed assets during 2019?
Complete this question by entering your answers in the tabs below.
· Req A and B
· Req C and D
· Req E
· Req F
· Req G
What is shareholders’ equity in 2018 and 2019? (Enter your answers in millions.)
2018
_______ million
2019
_____ million
ITEM 5
The founder of Alchemy Products Inc. discovered a way to turn gold into lead and patented this new technology. He then formed a corporation and invested $1,800,000 in setting up a production plant. He believes that he could sell his patent for $48 million.
a. What is the book value of the firm? (Enter your answer in dollars not in millions.)
b. What is the market value of the firm? (Enter your answer in dollars not in millions.)
c. If there are two million shares of stock in the new corporation, what would be the book value per share? (Round your answer to 2 decimal places.)
d. If there are two million shares of stock in the new corporation, what would be the price per share? (Round your answer to 2 decimal places.)
ITEM #6
Butterfly Tractors had $16.00 million in sales last year. Cost of goods sold was $8.40 million, depreciation expense was $2.40 million, interest payment on outstanding debt was $1.40 million, and the firm’s tax rate was 21%.
a. What was the firm’s net income? (Enter your answers in millions rounded to 2 decimal places.)
b. What was the firm’s cash flow? (Enter your answers in millions rounded to 2 decimal places.)
c. What would happen to net income and cash flow if depreciation were increased by $1.40 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)
f. What would be the impact on cash flow if depreciation was $1.40 million and interest expense was $2.40 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)
|
a. Net income million b. Net cash flow million c. Net income would be by million Cash flow would be by million f. Cash flow would be by million |
Item 8
During the last year of operations, Theta’s accounts receivable increased by $11,000, accounts payable increased by $5,500, and inventories decreased by $2,200. What is the total impact of these changes on the difference between profits and cash flow?
|
Total impact by |
ITEM 9
he following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2019.
|
INCOME STATEMENT OF QUICK BURGER CORP., 2019 |
|||
|
(Figures in $ millions) |
|||
|
Net sales |
$ |
27,569 |
|
|
Costs |
|
17,571 |
|
|
Depreciation |
|
1,404 |
|
|
Earnings before interest and taxes (EBIT) |
$ |
8,594 |
|
|
Interest expense |
|
519 |
|
|
Pretax income |
|
8,075 |
|
|
Federal taxes (@ 21%) |
|
1,696 |
|
|
Net income |
$ |
6,379 |
|
|
BALANCE SHEET OF QUICK BURGER CORP., 2019 |
|||||||||||||||||
|
(Figures in $ millions) |
|||||||||||||||||
|
Assets |
2019 |
|
2018 |
|
Liabilities and Shareholders' Equity |
2019 |
|
2018 |
|
||||||||
|
Current assets |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Cash and marketable securities |
$ |
2,338 |
|
|
$ |
2,338 |
|
|
Debt due for repayment |
|
— |
|
|
$ |
373 |
|
|
|
Receivables |
|
1,377 |
|
|
|
1,337 |
|
|
Accounts payable |
$ |
3,405 |
|
|
|
3,145 |
|
|
|
Inventories |
|
124 |
|
|
|
119 |
|
|
Total current liabilities |
$ |
3,405 |
|
|
$ |
3,518 |
|
|
|
Other current assets |
|
1,091 |
|
|
|
618 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
$ |
4,930 |
|
|
$ |
4,412 |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets |
|
|
|
|
|
|
|
|
Long-term debt |
$ |
13,635 |
|
|
$ |
12,136 |
|
|
|
Property, plant, and equipment |
$ |
24,679 |
|
|
$ |
22,837 |
|
|
Other long-term liabilities |
|
3,059 |
|
|
|
2,959 |
|
|
|
Intangible assets (goodwill) |
|
2,806 |
|
|
|
2,655 |
|
|
Total liabilities |
$ |
20,099 |
|
|
$ |
18,613 |
|
|
|
Other long-term assets |
|
2,985 |
|
|
|
3,101 |
|
|
Total shareholders’ equity |
|
15,301 |
|
|
|
14,392 |
|
|
|
Total assets |
$ |
35,400 |
|
|
$ |
33,005 |
|
|
Total liabilities and shareholders’ equity |
$ |
35,400 |
|
|
$ |
33,005 |
|
|
In 2019 Quick Burger had capital expenditures of $3,051.
a. Calculate Quick Burger’s free cash flow in 2019. (Enter your answer in millions.)
b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
c. What would the company’s free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
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