Details of this Paper

please see attach document: 1. Early in 2012...

Description

Solution


Question

please see attach document: 1. Early in 2012, you deliver the financial statement data below to a client. (note: income statement data is for 2011 only.) After a quick review, your client exclaims, " How can I be profitable, I borrowed $40,000 from the bank and my cash decreased by $2,000? I must have incurred a net loss." Explain to your client why the $40,000 loan and the $2,000 decrease in cash did not affect profitability. Calculate your client?s free cash flow. 2011 2010 Cash Accounts receivable Inventory Equipment Accumulated Depreciation Total Assets Accounts payable Notes payable (long term) Total Libilities Common Stock Premium Retained Earnings Total Liabilities and Equity $ 3,000 18,000 20,000 52,000 (10,000) $ 83,000 $ 4,000 40,000 $ 44,000 $ 2,000 18,000 19,000 $ 83,000 $ 5,000 8,000 15,000 20,000 ( 5,000) $ 43,000 $ 9,000 -0- $ 9,000 $ 2,000 18,000 14,000 $ 43,000 Sales $ 240,000 Cost of Sales 150,000 Operating expenses (including depreciation - $5,000) 70,000 Net income $ 20,000 Dividends paid $ 15,000 2. Use the following information to determine how much Xavier Metals is worth at the end of 2011. Can you think of any additional information you would like know about Xavier Metals to help you answer this question more thoroughly? Explain. (Note: All $ amounts are in millions. Assume there are 10 million shares of common stock outstanding.) . Xavier Metals . . . . . 2011 2010 . . . Cash 119 98 Marketable Securities 59 -0- Accounts receivable 312 254 Inventory 278 239 Prepaid expenses 35 21 Fixed assets 536 409 Accumulated depreciation ( 76) ( 53) Accounts payable 212 198 Accrued expenses 98 76 Dividend payable 40 -0- Notes payable 125 -0- Common stock 600 550 Retained earnings 188 144

 

Paper#5077 | Written in 18-Jul-2015

Price : $25
SiteLock