Change in net working capital calculation Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $926,000 and total current liabilities of $645,000. As a result of the proposed replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted. Account Accruals Marketable securities Inventories Accounts payable Notes payable Accounts receivable Cash Change a. The change in net working capital is S +$44,000 0 - 16,000 +95,000 0 + 149,000 + 11.000 a. Using the information given, calculate any change in net working capital that is expected to result from the proposed replacement action. b. Explain why a change in these current accounts would be relevant in determining the initial cash flow for the (Round to the

Change in net working capital calculation Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $926,000 and total current liabilities of $645,000. As a result of the proposed replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted. Account Accruals Marketable securities Inventories Accounts payable Notes payable Accounts receivable Cash Change a. The change in net working capital is S +$44,000 0 - 16,000 +95,000 0 + 149,000 + 11.000 a. Using the information given, calculate any change in net working capital that is expected to result from the proposed replacement action. b. Explain why a change in these current accounts would be relevant in determining the initial cash flow for the (Round to the

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

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 21PC

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At the beginning of the current year, Alexis Company purchase marketable equity securities to be held as “trading” for P5,000,000. The entity also paid transaction cost amounting to P200,000.The securities had a market value of P5,500,000 at year-ended and the transaction cost that would be incurred on the sale is estimated at P100,000. No securities were sold during the current year. Assuming the company has elected irrevocably to measure the investment at FV thru OCI. What amount of unrealized gain or loss on these securities should be reported in the income statement for the current year?
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Use attachment to answer the following Required: a. Calculate return on common equity and disaggregate ROCE for Years 5 and 9 using end-of-year values for com- putations requiring an average (assume fixed assets and working capital are operating and a 50% tax rate). b. Comment on Texas Telecom’s use of financial leverage.
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