Part A -
Q1. Net Income and OCF - During the year, Belyk paving Co. had sales of $2,700,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $1,690,000, $465,000, and $530,000, respectively. In addition, the company had an interest expense of $210,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)
a. What is Belyk's net income?
b. What is its operating cash flow?
c. Explain your results in (a) and (b).
Q2. A partial balance sheet and income statement for King Corporation follow:
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KING CORPORATION Partial Balance Sheet December 31, 2009
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Assets
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Current assets:
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Cash
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$33,493
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Marketable securities
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215,147
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Trade receivables, less allowance of $6,000
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255,000
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Inventories, LIFO
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523,000
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Prepaid expenses
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26,180
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Total current assets
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$1,052,820
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Liabilities
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Current liabilities:
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Trade accounts payable
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$103,689
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Notes payable (primarily to banks) and commercial paper
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210,381
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Accrued expenses and other liabilities
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120,602
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Income taxes payable
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3,120
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Current maturities of long-term debt
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22,050
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Total current liabilities
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$459,842
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KING CORPORATION Partial Income Satement For Year Ended December 31, 2009
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Net sales
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$3,050,600
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Miscellaneous income
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45,060
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$3,095,660
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Costs and expenses:
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Cost of sales
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$2,185,100
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Selling, general, and administrative expenses
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350,265
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Interest expense
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45,600
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Income taxes
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300,000
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2,880,965
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Net income
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$214,695
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Required- Compute the following:
a. Working capital
b. Current ratio
c. Acid-test ratio
d. Cash ratio
e. Days' sales in receivables
f. Accounts receivable turnover in days
g. Days' sales in inventory
h. Inventory turnover in days
i. Operating cycle
Q3. Individual transactions often have a significant impact on ratios. This problem will consider the direction of such an impact.
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Total Current Assets
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Total Current Liabilities
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Net Working Capital
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Current Ration
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a. Cash is acquired through issuance of additional common stock.
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b. Merchandise is sold for cash. (Assume a profit.)
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c. A fixed asset is sold for more than book value.
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d. Payment is made to trade creditors for previous purchases.
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e. A cash dividend is declared and paid.
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f. A stock dividend is declared and paid.
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g. Cash is obtained through lone-term bank loans.
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h. A profitable firm increases its fixed assets depreciation allowance account.
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i. Current operating expenses are paid.
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j. Ten-year notes are issued to pay of T accounts payable.
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k. Accounts receivable are collected.
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I. Equipment is purchased with short-term notes.
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m. Merchandise is purchased on credit.
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n. The estimated taxes payable are increased.
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o. Marketable securities are sold below cost.
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Required - Indicate the effects of the previous transactions on each of the following: total current assets, total current liabilities, net working capital, and current ratio. Use + to indicate at increase, - to indicate a decrease, and 0 to indicate no effect. Assume an initial current ratio 0 more than 1 to 1.
Part B -
Case - Chemical Bank: Implementing the Balanced Scorecard
After reading attach case, submit two to three page analysis on the following: What does Mike Hegarty want to accomplish with the BSC?
Case Study -
https://www.dropbox.com/s/4ni19quptjn60r6/Case%20Study.rar?dl=0.