Inc’s financial statements are as follows: TURCO Inc. Balance sheet For the Period ended 2019 and 2020 ($000) ASSETS 2019 2020 Cash $ 200 $ 150 Accounts receivable 450 425 Inventory 550 625 CURRENT ASSETS $ 1,200 $ 1,200 Plant & equipment $2,200 $2,600 Less Accumulated Depreciation (1,000) (1,200) Net Plant & equipment $1,200 $1,400 Total Assets $2,400 $2,600 LIABILITIES & Owner’s Equity Accounts payable $ 200 $150 Notes Payable current (15%) 0 150 CURRENT LIABILITIES $ 200 $300 Bonds $ 600 $600 Owner’s Equity Common stock $900 $900 Retained earnings 700 800 Total Owner’s Equity $ 1,600 $1,700 Total liabilities & Equity $2,400 $2,600 TURCO Inc. Income Statements (000’s) 2019 2020 Sales $1,200 $1,450 COGS 700 850 Gross Profit $500 $600 Selling, general, ADM Expenses 30 40 Depreciation 220 200 Operating Income $ 250 $ 360 Interest expense 50 64 EBT $200 $ 296 Taxes (40 %) 80 118 Net income $120 $178 Using the financial statements above, Calculate TURCO Inc.’s free cash flows from operation for year ending in 2020? What are the uses of TURCO’s FCFs?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 24CE

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Inc’s financial statements are as follows:

TURCO Inc. Balance sheet For the Period ended 2019 and 2020 ($000)
ASSETS
	2019	2020
Cash	$ 200	$ 150
Accounts receivable	450	425
Inventory	550	625
CURRENT ASSETS	$ 1,200	$ 1,200
Plant & equipment	$2,200	$2,600
Less Accumulated Depreciation	(1,000)	(1,200)
Net Plant & equipment	$1,200	$1,400
Total Assets	$2,400	$2,600
LIABILITIES & Owner’s Equity
Accounts payable	$ 200	$150
Notes Payable current (15%)	0	150
CURRENT LIABILITIES	$ 200	$300
Bonds	$ 600	$600
Owner’s Equity
Common stock	$900	$900
Retained earnings	700	800
Total Owner’s Equity	$ 1,600	$1,700
Total liabilities & Equity	$2,400	$2,600

TURCO Inc. Income Statements (000’s)
	2019	2020
Sales	$1,200	$1,450
COGS	700	850
Gross Profit	$500	$600
Selling, general, ADM Expenses	30	40
Depreciation	220	200
Operating Income	$ 250	$ 360
Interest expense	50	64
EBT	$200	$ 296
Taxes (40 %)	80	118
Net income	$120	$178

Using the financial statements above, Calculate TURCO Inc.’s free cash flows from operation for year ending in 2020? What are the uses of TURCO’s FCFs?

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