Corporate Finance, Student Value Edition (4th Edition)
4th Edition
ISBN: 9780134101446
Author: Berk, Jonathan; DeMarzo, Peter
Publisher: PEARSON
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Chapter 19, Problem 6P
Summary Introduction
To determine: The working capital requirement.
Introduction:
The difference between the net current assets and net current liability is termed as net working capital. The amount of funds or sum of current assets required to cover the operating expenses is termed as working capital requirements.
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Global Corp. expects sales to grow by
7%
next year. Using the percent of sales method and the data provided in the given tables
LOADING...
,
forecast:
a. Costs except depreciation
b. Depreciation
c. Net income
d. Cash
e. Accounts receivable
f. Inventory
g. Property, plant, and equipment
h. Accounts payable
(Note:
Interest expense will not change with a change in sales. Tax rate is
26%.)
The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.
Income Statement Net Sales 185.3Costs Except Depreciation -175.4EBITDA 9.9Depreciation and Amortization -1.2EBIT 8.7Interest Income (expense) -7.7Pretax Income 1Taxes (26%) -0.3Net Income 0.7
Balance Sheet Assets Cash 23.4Accounts…
You are given the following information for 1994: Sales = $50,000, CoG’s = $15,000, Depreciation = $5000, tax rate = 40%, Net Capital Spending = $15,000, Additions to Net Working Capital = $5000. Calculate EBIT, OCF, and CFA. Do you have to be worried if the CFA is negative? Explain.
Chapter 19 Solutions
Corporate Finance, Student Value Edition (4th Edition)
Ch. 19.1 - Prob. 1CCCh. 19.1 - Prob. 2CCCh. 19.2 - Prob. 1CCCh. 19.2 - Prob. 2CCCh. 19.3 - What is a pro forma income statement?Ch. 19.3 - Prob. 2CCCh. 19.4 - Prob. 1CCCh. 19.4 - Prob. 2CCCh. 19.5 - Prob. 1CCCh. 19.5 - Prob. 2CC
Ch. 19.6 - Prob. 1CCCh. 19.6 - Prob. 2CCCh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Under the assumptions that Idekos market share...Ch. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 11PCh. 19 - Calculate Idekos unlevered cost of capital when...Ch. 19 - Using the information produced in the income...Ch. 19 - How does the assumption on future improvements in...Ch. 19 - Approximately what expected future long-run growth...Ch. 19 - Prob. 16P
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