Consider the following financial information and answer the questions that follow: Sales : $250,000 Costs : $134,000 Depreciation : $10,200 Operating expenses : $6,000 Interest expenses : $20,700 Taxes : $18,420 Dividends : $10,600 Addition to Retained Earnings : $50,080 Long term debt repaid : $9,300 New Equity issued : $8,470 New fixed assets acquired : $15,000 You are required to: i) Calculate the operating cash flow ii) Calculate the cash flow to creditors iii) Calculate the cash flow to shareholders iv) Calculate the cash flow from assets v) Calculate net capital spending vi) Calculate change in NWC
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Question 1
Consider the following financial information and answer the questions
that follow:
Sales : $250,000
Costs : $134,000
Operating expenses : $6,000
Interest expenses : $20,700
Taxes : $18,420
Dividends : $10,600
Addition to
Long term debt repaid : $9,300
New Equity issued : $8,470
New fixed assets acquired : $15,000
You are required to:
i) Calculate the operating cash flow
ii) Calculate the cash flow to creditors
iii) Calculate the cash flow to shareholders
iv) Calculate the cash flow from assets
v) Calculate net capital spending
vi) Calculate change in NWC
Question 2
The following financial information is available for Hero Sports Ltd.:
Sales : $45,000
Costs : $25,000
Addition to retained earnings : $5,500
Dividends paid : $900
Interest expense : $1,450
Tax rate : 40%
Compute the depreciation expense.
Question 3
Use the following information to answer the question that follow:
Net Income : $205,000
Profit margin : 7.80%
A/R : $151,642
Credit sales : 60% of total sales
Compute the days’ sales in receivables
Step by step
Solved in 7 steps with 5 images
