Marketing Essay

1175 Words5 Pages
1. Building a balance sheet
Wow Dat, Inc., has current assets for $3,840, net fixed assets of $10,190, current liabilities of $2,470, and long-term debt of $3,980. What is the value of the shareholders equity account for this firm? How much is net working capital?
Balance sheet

Current assets 3840 Current liabilities 2470
Net fixed assets 10190 long-term depts 3980 Owners equity 7580
Total assets 14030 total liabilities & equity 14030

Owners equity = total liabilities – Current liabilities – long – term debt

=14030 – 2470 – 3980
= 7580

Net working capital = current assest – current liabilities
NWC = 3840 – 2470
NWC =
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Each firm has marginal tax of 34% on the next $5000 of taxable income, despite their diffrence average tax rates, so both will pay $1700.

19. Nat Income and OFC.
During the year, Belyk Paving Co. had sales $2,400,000. Cost of good sold, adminstrative and selling expense, and depreciation expenses were $1,425,000,$435,000, and 490,000, respectively. In addition, the company had an interest expense of $215,000 and a tax rate of 35%. (Ignor any tax lass carryback or carrryforward provisions.)

a. What is Belyk’s net income?

Income statement

Sales
2,400,000
Costs
1,425,000
Admin & selling expenses
435,000
Despreciation
490,000
EBIT
50,000
Interest
215,000
Taxable income
-165,000
Taxes (35%)
0
Net income -165,000

b. What is its operating cash flow?

OCF = EBIT + depreciation – taxes = 50,000 + 490,000 – 0 = $540,000

c. Explain your results in (a) and (b).
Net income was negative case of the tax deducted and interest expense. However, the cash flow from operations was posittive cause of depreciation in non-cash expense and interest is fiancing, not an operating expense.

22. Calculating Cash Flows.
a. What is owners equity for 2009 and 2010?
For 2009:
Total assets = 2,665 + 12,355 = 15,020

Owner’s equity is:
Total liability & owner’s equity = current
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