6- Consider the following financial statements (in millions of TL). What would be the retained earnings for the year 2016? Balance Sheet (2016) Income Statement (2016) Credit Sales Cost of Goods Sold (800) Taxable Income 1.000 Cash 160 Accounts Payable Accounts Receivable 440 Short-Term Debt 600 Long-Term Debt 1.800 Common Stock 300 100 800 800 Retained Eamings 1.000 3.000 ? Inventory Fixed Assets Taxes (34%) Net Income Total 3.000 Total Dividend (33.33%) Retained Earnings ? Main assumptions Sales are expected to increase by 25% in 2017. "Cost of goods sold" is a fraction of sales in the income statement. All other items are independent of sales. Each current asset and accounts payable are fractions of sales in the balance sheet All other items are independent of sales. If there is a need for external funding: o raise funds through short term debt first, but current ratio must not be smaller than 3. o raise the remaining funds through 50% long-term debt and 50% equity offering (common stock). I toin O 200 O 88 O 44 132

6- Consider the following financial statements (in millions of TL). What would be the retained earnings for the year 2016? Balance Sheet (2016) Income Statement (2016) Credit Sales Cost of Goods Sold (800) Taxable Income 1.000 Cash 160 Accounts Payable Accounts Receivable 440 Short-Term Debt 600 Long-Term Debt 1.800 Common Stock 300 100 800 800 Retained Eamings 1.000 3.000 ? Inventory Fixed Assets Taxes (34%) Net Income Total 3.000 Total Dividend (33.33%) Retained Earnings ? Main assumptions Sales are expected to increase by 25% in 2017. "Cost of goods sold" is a fraction of sales in the income statement. All other items are independent of sales. Each current asset and accounts payable are fractions of sales in the balance sheet All other items are independent of sales. If there is a need for external funding: o raise funds through short term debt first, but current ratio must not be smaller than 3. o raise the remaining funds through 50% long-term debt and 50% equity offering (common stock). I toin O 200 O 88 O 44 132

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 17E

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