Chapter 2

Question 1. Building a Balance Sheet Bishop, Inc., has current assets of $5,700, net fixed assets of $27,000, current liabilities of $4,400, and long-term debt of $12,900. What is the value of the shareholders' equity account for this firm? How much is net working capital?

Question 2. Building au Income Statement Travis, Inc., has sales of $387,000, costs of $175,000, depreciation expense of $40,000, interest expense of $21,000, and a tax rate of 35 percent. What is the net income for the firm? Suppose the company paid out $30,000 in cash dividends. What is the addition to retained earnings?

Question 3. Calculating OCF Ranney, Inc., has sales of $18,700, costs of $10,300, depreciation expense of $1,900, and interest expense of $1,250. If the tax rate is 40 percent, what is the operating cash flow, or OCF?

Question 4.Calculating Total Cash Flows Schwert Corp. shows the following information on its 2012 income statement: sales = $185,000; costs = $98,000; other expenses = $6,700; depreciation expense = $16,500; interest expense = $9,000; taxes = $19,180; dividends = $9,500. In addition, you're told that the firm issued $7,550 in new equity during 2012 and redeemed $7,100 in outstanding long-term debt.
a. What is the 2012 operating cash flow?
b. What is the 2012 cash flow to creditors?
c. What is the 2012 cash flow to stockholders?
d. If net fixed assets increased by $26,100 during the year, what was the addition to net working capital (NWC)?