Question 1. Biven Corporation's balance sheet and income statement appear below:
|
BALANCE SHEETS
|
|
2006
|
2005
|
|
ASSETS
|
|
Cash & equivalents
|
$35,000
|
$30,000
|
|
Accounta receivable
|
54,000
|
49,000
|
|
Inventory
|
67,000
|
58,000
|
|
Plant & equipment
|
580,000
|
530,000
|
|
Accumulated depreciation
|
(316,000)
|
(313,000)
|
|
Total Assets
|
$420,000
|
$354,000
|
|
LIABILITIES & EQUITIES
|
|
Accounts payable
|
$51,000
|
$57,000
|
|
Wages payable
|
26,000
|
24,000
|
|
Taxes payable
|
11,000
|
10,000
|
|
Deferred taxes payable
|
25,000
|
24,000
|
|
Bonds payable (long term)
|
77,000
|
90,000
|
|
Total liabilities
|
190,000
|
205,000
|
|
Common stock
|
33,000
|
30,000
|
|
Retained earnings
|
197,000
|
119,000
|
|
Total equities
|
230,000
|
149,000
|
|
Total liabilities & equities
|
$420,000
|
$354,000
|
|
INCOME STATEMENTS
|
|
2006
|
2005
|
|
Sales
|
$620,000
|
$520,000
|
|
Cost of goods sold
|
381,000
|
300,000
|
|
Gross margin
|
239,000
|
220,000
|
|
Selling & Admin expense
|
103,000
|
99,000
|
|
Net operating income
|
136,000
|
121,000
|
|
Gain on sale of plant & equipment
|
20,000
|
-
|
|
Income before tax
|
156,000
|
121,000
|
|
Income tax
|
47,000
|
36,000
|
|
Net income
|
$109,000
|
$85,000
|
Cash dividends were $31,000. The company sold equipment for $20,000. The equipment had originally cost $14,000 and was fully depreciated.
Required: Prepare a statement of cash flows for 2006 using the indirect and direct methods.
Question 2. Biven Corporation's balance sheet and income statement appear below:
|
BALANCE SHEETS
|
Increase (Decrease)
|
|
2006
|
2005
|
Amount
|
Percent
|
|
ASSETS
|
|
|
|
Cash & equivalents
|
$35,000
|
$30,000
|
|
|
|
Accounta receivable
|
54,000
|
49,000
|
|
|
|
Inventory
|
67,000
|
58,000
|
|
|
|
Plant & equipment
|
580,000
|
530,000
|
|
|
|
Accumulated depreciation
|
(316,000)
|
(313,000)
|
|
|
|
Total Assets
|
$420,000
|
$354,000
|
|
|
|
LIABILITIES & EQUITIES
|
|
|
|
Accounts payable
|
$51,000
|
$57,000
|
|
|
|
Wages payable
|
26,000
|
24,000
|
|
|
|
Taxes payable
|
11,000
|
10,000
|
|
|
|
Bonds payable
|
77,000
|
90,000
|
|
|
|
Deferred taxes
|
25,000
|
24,000
|
|
|
|
Total liabilities
|
190,000
|
205,000
|
|
|
|
Common stock
|
33,000
|
30,000
|
|
|
|
Retained earnings
|
197,000
|
119,000
|
|
|
|
Total equities
|
230,000
|
149,000
|
|
|
|
Total liabilities & equities
|
$420,000
|
$354,000
|
|
|
|
INCOME STATEMENTS
|
|
|
|
2006
|
2005
|
|
|
|
Sales
|
$620,000
|
$520,000
|
|
|
|
Cost of goods sold
|
381,000
|
300,000
|
|
|
|
Gross margin
|
239,000
|
220,000
|
|
|
|
Selling & Admin expense
|
103,000
|
99,000
|
|
|
|
Net operating income
|
136,000
|
121,000
|
|
|
|
Gain on sale of plant & equipment
|
20,000
|
-
|
|
|
|
Income before tax
|
156,000
|
121,000
|
|
|
|
Income tax
|
47,000
|
36,000
|
|
|
|
Net income
|
$109,000
|
$85,000
|
|
|
Cash dividends were $31,000. The company sold equipment for $20,000. The equipment had originally cost $14,000 and was fully depreciated.
Required: Fill in the Amounts and Percent of change in the balance sheet and income statements.
Question 3. Espinola Corporation's most recent balance sheet and income statement appear below:
|
BALANCE SHEETS
|
|
2006
|
2005
|
|
ASSETS
|
|
Cash & equivalents
|
$320,000
|
$180,000
|
|
Accounta receivable
|
220,000
|
240,000
|
|
Inventory
|
140,000
|
130,000
|
|
Prepaid expenses
|
20,000
|
20,000
|
|
Total current assets
|
700,000
|
570,000
|
|
Plant & equipment, net
|
860,000
|
920,000
|
|
Total Assets
|
$1,560,000
|
$1,490,000
|
|
LIABILITIES & EQUITIES
|
|
Accounts payable
|
$200,000
|
$170,000
|
|
Accrued payable
|
80,000
|
80,000
|
|
Notes payable, current
|
40,000
|
40,000
|
|
Total current liabilities
|
320,000
|
290,000
|
|
Bonds payable
|
210,000
|
220,000
|
|
Total liabilities
|
530,000
|
510,000
|
|
Preferred stock, $100 par value, 5%
|
100,000
|
100,000
|
|
Common stock, $1 par value
|
100,000
|
100,000
|
|
Additional paid in capital, common stock
|
150,000
|
150,000
|
|
Retained earnings
|
680,000
|
630,000
|
|
Total equities
|
1,030,000
|
980,000
|
|
Total liabilities & equities
|
$1,560,000
|
$1,490,000
|
|
INCOME STATEMENT
|
|
2006
|
|
Sales
|
$1,220,000
|
|
Cost of goods sold
|
790,000
|
|
Gross margin
|
430,000
|
|
Selling & Admin expense
|
268,000
|
|
Net operating income
|
162,000
|
|
Interest expense
|
26,000
|
|
Income before tax
|
136,000
|
|
Income tax
|
41,000
|
|
Net income
|
95,000
|
|
Dividends paid, preferred
|
5,000
|
|
Net income for common shareholders
|
90,000
|
|
Dividends paid, common
|
40,000
|
|
Net income added to retained earnings
|
50,000
|
|
Beginning retained earnings
|
630,000
|
|
Ending retained earnings
|
$680,000
|
|
Other:
|
|
|
Market value of stock end of year
|
$12.87
|
|
Tax rate
|
30%
|
|
Bond interest
|
10%
|
|
Return demanded on preferred stock
|
10%
|
|
Return demanded on common stock
|
14%
|
Required compute the following for 2006:
a. Gross margin percentage.
b. Earnings per share (of common stock).
c. Price-earnings ratio.
d. Dividend payout ratio.
dividend per share
dividend payout ratio
e. Dividend yield ratio.
f. Return on total assets.
after tax cost of interest
average total assets
return on total assets
g. Return on common stockholders' equity.
average stockholders equity
average preferred stock
return on equity
h. Book value per share.
i. Working capital.
j. Current ratio.
k. Acid-test ratio.
l. Accounts receivable turnover.
m. Average collection period (days).
n. Inventory turnover.
o. Average sale period (days).
p. Times interest earned.
q. Debt-to-equity ratio.
r. Show that financial leverage is positive or negative.