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The balance sheet accounts listed below are the only items on the company's balance sheet for...

The balance sheet accounts listed below are the only items on the company's balance sheet for each year and the income statement accounts are the only items on the company's income statement for each year.

Item	2017	2018
Accounts payable	550	230
Accounts receivable	510	?
Accruals	1,000	1,100
Cash	300	550
Common Stock	2,000	2,250
Cost of goods sold	4,000	4,600
Depreciation expense	200	350
Interest expense	170	190
Inventory	3,000	3,250
Long term debt	1,500	1,650
Net fixed assets	2,700	2,500
Notes payable	750	580
Operating expense	300	430
Retained earnings	?	840
Sales	5,000	6,000
Taxes	120	140

1. If dividends paid in 2018 were $160, the 2017 Retained earnings balance was $__________?

A. 710 B. 725 C. 740 D. 770 E. 800

2. The firm's return on equity (ROE) for 2018 is _____% ?

A. 9.93 B. 15.36 C. 11.74 D. 12.52 E. 7.25

3. The cash flow from operating activities in 2018 was $_______?

A. 430 B. 350 C. 405 D. 330 E. 300

4. The company spent $___ on new fixed assets in 2018.

A. 5 B. 25 C.50 D.150 E. 250

Solutions

Expert Solution

2017 2018

Net income 210 290

Dividends 160

Addition to retained earnings 130

Retained earnings in 2017 710

A) 710

B) 9.39%

C) 330 Net income + depreciation + increase in AP - increase in AR - increase in inventory + increase in accruals

D) Fixed assets Net fixed assets (2018) - Net fixed assets (2017) + Depreciation (2017)

Fixed assets 150

E) COGS % 77%

F) Operating Profit 620 (Sales-COGS-Op Expense-Depreciation)

Operating profit margin 10.33%

G) Total liability for 2018 6,650

Assets 6,650

Less:

Cash 550

Inventory 3,250

Net fixed assets 2,500

Account receivable 350

jeff jeffy answered 1 year ago

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