00 Text Ch1 Additional Problems Updated

ANALYSIS FOR FINANCIAL MANAGEMENT
10TH Edition
Robert C. Higgins
Additional Problems
Chapter 1

1) The following are the Balance Sheet and Income Statement for XYZ Corp.

December 31st

Year 0
Year 1
Current Assets

Cash
$100,000
$132,000
Accounts Receivable

$85,000
Inventories
$95,000
$75,000
Total current assets
$195,000
$292,000
Noncurrent Assets

Land
$30,000
$30,000
Buildings
200,000
310,000
Equipment
120,000
130,000
Patent
10,000
10,000
Accumulated depreciation
(20,000)
(25,000)
Total noncurrent assets
340,000
455,000
Total Assets
$535,000
$747,000

Current Liabilities

Accounts payable to suppliers
$100,000
$50,000
Income taxes payable

20,000
Total current liabilities
100,000
70,000
Noncurrent Liabilities

Long term debt
200,000
250,000
Total liabilities
300,000
320,000
Shareholders’ Equity

Common Stock
235,000
327,000
Retained Earnings

100,000
Total shareholders’ equity
235,000
427,000
Total Liabilities and Shareholders Equity
$535,000
$747,000

Income statement for Year 1
Sales revenue
$335,000
Cost of good Sales
(95,000)
Depreciation expenses
(5,000)
Net interest expenses
(4,000)
Other expenses
(11,000)
Income before taxes
220,000
Provision for income taxes
(80,000)
Net income
$140,000
Dividends paid
40,000
Additions to retained earnings
$100,000

a) Looking at the changes in balance sheet accounts, prepare a sources and uses statement for XYZ in year 1.
b) Prepare a cash flow statement for XYZ in year 1.
2) Use the following information to estimate DTV Corporation's net cash flow from operations as it would appear on the company's 2010 cash flow statement.

2009
2010
Net sales
$300
$400
Cost of goods sold 160 200
Gross income
140
200
Depreciation
30
40
General, selling expenses 20 20
Income before tax
60
140
Provision for taxes @ 40%
36
66
Income after tax
$54
$84

Cash
$100
$50
Accounts receivable
50
100
Inventory
60
40

Accrued taxes
$100
$120
Accrued wages
60
30
Accounts payable
30
40
3) Below is selected information