Cash Flowsfrom OperHoriz Analysis Horiz Analysis Vertic Analysis Vertic AnalysisInc StRatiosBal StInc StBal SheetRequirementPrepare a vertical analysis on the partial income statements for 2017 and 2018. Enter decreases as negativeamounts/percents.C. Kleln Inc.PARTIAL INCOME STATEMENT (HORIZONTAL ANALY SIS)For the yeara ended December 31, 2017 and 2018Increase/decrease20182017AmountPercentSales422,000Cost of goods soldGross marginExpensesDepreciation expenseOther operating expenses85,000Total operating expensesOperating income< Cash Flowa from OperHoriz Analyala Bal st> rehensive Problem 2- St of Cash Flows and Ratios AlgoC. Klein Inc.C. Klein Inc.Income StatementComparative Balance SheetsDecember 31, 2018 and 2017For years ended December 31, 2017 and 201820182017Change20182017$469,000 $422,000(303,000) (248,000)166,000 174,000Current assets:Sales (all on credit)Cost of goods soldGross marginCash$52.26034,000$37,900 $14,360Accounts receivable (net)28,0006,000InventoryPrepaid expenses44,00042,00021002,000-1,200900Depreciation expenseOther operating563136,00051,000Other current assets13102000-690102,00085,000Totol current assets132,470112,000 20,470expensesTotal operating138,000 136,000expensesokOperating income28.00038,000Long-term Investments75,00052,000 23,000Other income(expenses)Plant assets302,000253,000 49,000ncesInterest expense(4,700)(3,500)Less: accumulated(76,800)(51,000) 25,800depreciationGain on sale of4,9003,400Total plant assets225,200202,000 23,200investmentsLoss on sale of plant(2100)(2.500)Total assets432670366,000 66.670OssetsTotal other income(expenses)(11,700)(2,600)Current liabilities:Income before incometaxes26,10035.400Accounts payeble$25,500$26,000S-500Income taxes expense(7,830)(10,620)Accrued liabilities2,40050028,4002000200030,000400Net income$18,270 $24.780Income taxes payableTotal current liobilities-1.500-1,600C. Kleln Inc.Statement of Retained EarningsLong term liabilities:Notes Payable236,000175,000 61.000For the year ended December 31, 2018Total lisbilities264.400205.000 59.40020182017Ret esrnings, Jan. 1$0Stockholders' equityCommon stock, $5 par$23,000Add: net income18,27024,780110,000110,000valueDeduct: DividendsIncreose in retainedearningsRet eornings, Dec. 31(11,000),(1.780)Additional paid-in capital28,00028,0007.27023,000Retained earnings30.27023.0007.270Total stockholders' equityTotal liobilities andstockholders' equity$30.270 $23.000168,270161,0007,270$432.670$366.000 $66,670Other informotion:Shares of commonstock outstondingEamings per shareDividends per shareMarket price pershore, common stock22,00022,000$0.83S0.5$113$0.08$13$12

Vertical analysis mainly refers to the method of financial statement analysis that, helps in figure…

C. Klein Inc. Income Statement For years ended December 31, 2017 and 2018 2018 $469,000 $422,000 303,000) (248,000) 166,000 174,000 2017 Sales (all on credit) Cost of goods sold Gross margin Depreciation expense Other operating 36,000 51,000 102,000 85,000 expenses Total operating 138,000 136,000 expenses Operating income 28,000 38,000 Other income (expenses) Interest expense (4,700) (3,500) Gain on sale of 4,900 3,400 investments Loss on sale of plant (2.100) (2,500) assets Total other income (expenses) (11,700) (2,600) Income before income 26,100 35,400 taxes Income taxes expense (7,830) (10,620 $18.270 $24780 Net income

C. Klein Inc. Income Statement For years ended December 31, 2017 and 2018 2018 $469,000 $422,000 303,000) (248,000) 166,000 174,000 2017 Sales (all on credit) Cost of goods sold Gross margin Depreciation expense Other operating 36,000 51,000 102,000 85,000 expenses Total operating 138,000 136,000 expenses Operating income 28,000 38,000 Other income (expenses) Interest expense (4,700) (3,500) Gain on sale of 4,900 3,400 investments Loss on sale of plant (2.100) (2,500) assets Total other income (expenses) (11,700) (2,600) Income before income 26,100 35,400 taxes Income taxes expense (7,830) (10,620 $18.270 $24780 Net income

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter3: Income Flows Versus Cash Flows: Understanding The Statement Of Cash Flow

Section: Chapter Questions

Problem 1DIC

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FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho Industriess 2017 and 2018 balance sheets (in thousands of dollars) are shown. 2018 2017 Cash 102,850 89,725 Accounts receivable 103,365 85,527 Inventories 38,444 34,982 Total current assets 244,659 210,234 Net fixed assets 67,165 42,436 Total assets 311,824 252,670 Accounts payable 30,761 23,109 Accruals 30,477 22,656 Notes payable 16,717 14,217 Total current liabilities 77,955 59,982 Long-term debt 76,264 63,914 Total liabilities 154,219 123,896 Common stock 100,000 90,000 Retained earnings 57,605 38,774 Total common equity 157,605 128,774 Total liabilities and equity 311,824 252,670 a. Sales for 2018 were 455,150,000, and EBITDA was 15% of sales Furthermore, depreciation and amortization were 11%. of net fixed assets, interest was 8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income as dividends Given this information. construct the firms 2018 income statement. b. Construct the statement of stockholders equity for the year ending December 31, 2018, and the 2018 statement of cash flows. c. Calculate 2017 and 2018 net operating working capital (NOWC) and 2018 free cash flow (FCF). Assume the firm has no excess cash. d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid What effect would this have on taxis, paid by the companys shareholders? e. Assume that the firms after-tax cost of capital is 10 5%. What is the firms 2018 EVA? f. Assume that the firms stock price is S22 per share and that at year-end 2018 the firm has 10 million shares outstanding. What is the firms MVA at year-end 2018?
FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho Industries' 2013 and 2014 balance sheets (in thousands of dollars) are shown. 2014 2013 Cash 102,850 89,725 Accounts receivable 103,365 85,527 Inventories 38,444 34,982 Total current assets 244,659 210,234 Net fixed assets 67,165 42,436 Total assets 311,824 252,670 Accounts payable 30,761 23,109 Accruals 30,477 22.656 Notes payable 16,717 14,217 Total current liabilities 77,955 59,982 long term debt 76,264 63,914 Total liabilities 154,219 123,896 Common stock 100,000 90,000 Retained earnings 57,605 38,774 Total common equity 157,605 128,774 Total liabilities and equity 311,824 252,670 a. Sales for 2014 were 455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation and amortization were 11% of net fixed assets, interest was 8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income as dividends. Given this information, construct the firm's 2014 income statement. b. Construct the statement of stockholders' equity for the year ending December 31,2014, and the 2014 statement of cash flows. c. Calculate 2013 and 2014 net operating working capital (NOWC) and 2014 free cash flow (FCF). d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company's shareholders? e. Assume that the firm's after-tax cost of capital is 105%. What is the firm's 2014 EVA? f. Assume that the firm's stock price is 22 per share and that at year-end 2014 the firm has 10 million shares outstanding. What is the firm's MVA at year-end 2014?
FREE CASH FLOW Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as of December 31 2018 2017 Assets Cash and equivalents 15,000 14,000 Accounts receivable 35,000 30,000 Inventories 33,320 27,000 Total current assets 83,320 71,000 Net plant and equipment 48,000 46,000 Total assets 131,320 117,000 Liabilities and Equity Accounts payable 10,100 9,000 Accruals 8,000 6,000 Notes payable 7,000 5,050 Total current liabilities 25,100 20,050 Long term bonds 20,000 20,000 Total liabilities 45,100 40,050 Common stock(4,000 shares) 40,000 40,000 Retained earnings 46,220 36,950 Common equity 86,220 76,950 Total liabilities and equity 131,320 117,000 Income Statement for Year Ending December 31, 2018 Sales 210,000 Operating cost excluding depreciation and amortization 160,00 EBITDA 50,000 Depreciation and amortization 6000 EBIT 44,000 interest 5,350 EBT 5,38,650 Taxes (40%) 15,460 Net income 23,190 Dividends paid 13,920 a. What was net operating working capital for 2017 and 2018? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes. b. What was .Arlingtons 2018 free cash flow? c. Construct Arlingtons 2018 statement of stockholders equity. d. What was Arlingtons 2018 EVA? Assume that its after tax cost of capital is 10%. e. What was Arlingtons MVA at year-end 2018? Assume that its stock price at December 31, 2018? Was 25.
Financial statements Padget Home Services began its operations on January 1, 20Y7 (see Problem 2-3). After its second year of operations. the following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y8. Instructions Prepare a statement of cash flows for the year ending December 31, 20Y8. (Hint: You should compare the asset and liability amounts of December 31. 20Y8, with those of December 31, 20Y7, to determine cash used in investing and financing activities. See Problem 2-3 for the December 31, 20Y7, balance sheet amounts.)
Exercise 1-50 Statement of Cash Flows OBJECTIVE o Walters Inc. began operations on January I. 2019. The following information relates to Walters cash flows during 2019. Required: 1. Calculate the cash provided/fused for each cash flow category. 2. CONCEPTUAL CONNECTION Comment on Walters creditworthiness.
Statement of cash flowsdirect method applied to PR 14-1B The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 2016 and 2015, is: Dec. 31,2016 Dec. 31.201S Assets Cash 70,720 47,940 Accounts receivable (net) 207,230 188,190 Inventories 298,520 289,850 Investments. 0 102,000 Land 295,800 0 Equipment 438,600 358,020 Accumulated depreciationequipment (99,110) (84,320) Total assets 1,21,760 901,680 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) 205,700 194,140 Accrued expenses payable (operating expenses! 30,600 26,860 Dividends payable 25,500 20,400 Common stock. Si par. 202,000 102,000 Paid in capital: Excess of issue price over parcommon stock 354,000 204,000 Retained earnings 393,960 354,280 Total liabilities and stockholders equity 1,211,760 901,680 The income statement for the year ended December 31, 2016, is as follows: Sales- 2,023,898 Cost of merchandise sold 1,245,476 Gross profit 778,422 Operating expenses: Depreciation expense 14,790 Other operating expenses 517,299 Total operating expenses 532,089 Operating income 246,333 Other expenses: Loss on sale of investments (10,200) Income before income tax 236,133 Income tax expense- 94,453 Net income- 141,680 Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows: a. Equipment and land were acquired for cash. b. There were no disposals of equipment during the year. c. The investments were sold for 91,800 cash. d. The common stock was issued for cash. e. There was a 102,000 debit to Retained Laming for cash dividends declared. Instructions Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.