Question
In: Finance
Graffiti Advertising, Inc., reported the following financial statements for the last two years. 2019 Income Statement...
| Graffiti Advertising, Inc., reported the following financial statements for the last two years. |
| 2019 Income Statement | ||
| Sales | $ | 573,200 |
| Costs of goods sold | 273,945 | |
| Selling & administrative | 124,717 | |
| Depreciation | 54,560 | |
| EBIT | $ | 119,978 |
| Interest | 19,648 | |
| EBT | $ | 100,330 |
| Taxes | 40,132 | |
| Net income | $ | 60,198 |
| Dividends | $ | 11,200 |
| Addition to retained earnings | $ | 48,998 |
| GRAFFITI ADVERTISING, INC. Balance Sheet as of December 31, 2018 |
|||||
| Cash | $ | 13,480 | Accounts payable | $ | 9,488 |
| Accounts receivable | 18,978 | Notes payable | 14,492 | ||
| Inventory | 13,810 | ||||
| Current liabilities | $ | 23,980 | |||
| Current assets | $ | 46,268 | Long-term debt | $ | 135,520 |
| Net fixed assets | $ | 344,906 | Owners' equity | $ | 231,674 |
| Total assets | $ | 391,174 | Total liabilities and owners’ equity | $ | 391,174 |
| GRAFFITI ADVERTISING, INC. Balance Sheet as of December 31, 2019 |
|||||
| Cash | $ | 14,466 | Accounts payable | $ | 10,528 |
| Accounts receivable | 21,083 | Notes payable | 16,482 | ||
| Inventory | 22,770 | ||||
| Current liabilities | $ | 27,010 | |||
| Current assets | $ | 58,319 | Long-term debt | $ | 153,600 |
| Net fixed assets | $ | 406,295 | Owners' equity | $ | 284,004 |
| Total assets | $ | 464,614 | Total liabilities and owners’ equity | $ | 464,614 |
| a. | Calculate the operating cash flow. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| b. | Calculate the change in net working capital. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| c. | Calculate the net capital spending. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| d. | Calculate the cash flow from assets. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| e. | Calculate the cash flow to creditors. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| f. | Calculate the cash flow to stockholders. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
|
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Solutions
Expert Solution
Answer a.
Operating Cash Flow = EBIT + Depreciation - Taxes
Operating Cash Flow = $119,978 + $54,560 - $40,132
Operating Cash Flow = $134,406
Answer b.
Change in Net Working Capital = Ending Net Working Capital -
Beginning Net Working Capital
Change in Net Working Capital = (Ending Current Assets - Ending
Current Liabilities) - (Beginning Current Assets - Beginning
Current Liabilities)
Change in Net Working Capital = ($58,319 - $27,010) - ($46,268 -
$23,980)
Change in Net Working Capital = $9,021
Answer c.
Net Capital Spending = Ending Net Fixed Assets + Depreciation -
Beginning Net Fixed Assets
Net Capital Spending = $406,295 + $54,560 - $344,906
Net Capital Spending = $115,949
Answer d.
Cash Flow from Assets = Operating Cash Flow - Net Capital
Spending - Change in Net Working Capital
Cash Flow from Assets = $134,406 - $115,949 - $9,021
Cash Flow from Assets = $9,436
Answer e.
Net New Long-term Debt = Ending Long-term Debt - Beginning
Long-term Debt
Net New Long-term Debt = $153,600 - $135,520
Net New Long-term Debt = $18,080
Cash Flow to Creditors = Interest Paid - Net New Long-term
Debt
Cash Flow to Creditors = $19,648 - $18,080
Cash Flow to Creditors = $1,568
Answer f.
Cash Flow from Assets = Cash Flow to Creditors + Cash Flow to
Stockholders
$9,436 = $1,568 + Cash Flow to Stockholders
Cash Flow to Stockholders = $7,868
jeff jeffy answered 4 months agoRelated Solutions
Graffiti Advertising, Inc., reported the following financial statements for the last two years. 2019 Income Statement...
Graffiti Advertising, Inc., reported the following financial
statements for the last two years.
2019 Income Statement
Sales
$
565,200
Costs of goods sold
274,025
Selling & administrative
124,733
Depreciation
54,576
EBIT
$
111,866
Interest
19,296
EBT
$
92,570
Taxes
48,137
Net income
$
44,433
Dividends
$
9,600
Addition to retained earnings
$
34,833
GRAFFITI ADVERTISING, INC.
Balance Sheet as of December 31, 2018
Cash
$
13,320
Accounts payable
$
9,504
Accounts receivable
18,994
Notes payable
14,508
Inventory
13,794
Current liabilities...
Graffiti Advertising, Inc., reported the following financial statements for the last two years. 2019 Income Statement...
Graffiti Advertising, Inc., reported the following financial
statements for the last two years.
2019 Income Statement
Sales
$
573,200
Costs of goods sold
273,945
Selling & administrative
124,717
Depreciation
54,560
EBIT
$
119,978
Interest
19,648
EBT
$
100,330
Taxes
40,132
Net income
$
60,198
Dividends
$
11,200
Addition to retained earnings
$
48,998
GRAFFITI ADVERTISING, INC.
Balance Sheet as of December 31, 2018
Cash
$
13,480
Accounts payable
$
9,488
Accounts receivable
18,978
Notes payable
14,492
Inventory
13,810
Current liabilities...
Graffiti Advertising, Inc., reported the following financial statements for the last two years. 2016 Income Statement...
Graffiti Advertising, Inc., reported the following financial
statements for the last two years. 2016 Income Statement Sales $
568,700 Costs of goods sold 273,990 Selling and administrative
124,726 Depreciation 54,569 EBIT $ 115,415 Interest 19,450 EBT $
95,965 Taxes 38,386 Net income $ 57,579 Dividends $ 10,300 Addition
to retained earnings $ 47,279 GRAFFITI ADVERTISING, INC. Balance
Sheet as of December 31, 2015 Cash $ 13,390 Accounts payable $
9,497 Accounts receivable 18,987 Notes payable 14,501 Inventory
13,801 Current liabilities...
Graffiti Advertising, Inc., reported the following financial statements for the last two years. 2016 Income...
Graffiti Advertising, Inc., reported the following financial
statements for the last two years.
2016 Income Statement
Sales
$
571,200
Costs of goods sold
273,965
Selling and administrative
124,721
Depreciation
54,564
EBIT
$
117,950
Interest
19,560
EBT
$
98,390
Taxes
39,356
Net income
$
59,034
Dividends
$
10,800
Addition to retained
earnings
$
48,234
GRAFFITI ADVERTISING, INC.
Balance Sheet as of December 31, 2015
Cash
$
13,440
Accounts
payable
$
9,492
Accounts receivable
18,982
Notes payable
14,496
Inventory
13,806
Current...
Graffiti Advertising, Inc., reported the following financial statements for the last two years. 2016 Income...
Graffiti Advertising, Inc., reported the following financial
statements for the last two years.
2016 Income Statement
Sales
$
567,700
Costs of goods sold
274,000
Selling and administrative
124,728
Depreciation
54,571
EBIT
$
114,401
Interest
19,406
EBT
$
94,995
Taxes
37,998
Net income
$
56,997
Dividends
$
10,100
Addition to retained earnings
$
46,897
GRAFFITI ADVERTISING, INC.
Balance Sheet as of December 31, 2015
Cash
$
13,370
Accounts payable
$
9,499
Accounts receivable
18,989
Notes payable
14,503
Inventory
13,799
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2020 Income Statement
Sales
$
565,330
Cost of goods sold
273,960
Selling & administrative
124,720
Depreciation
54,563
EBIT
$
112,087
Interest
19,309
EBT
$
92,778
Taxes
48,245
Net income
$
44,533
Dividends
$
10,900
Addition to retained earnings
$
33,633
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Balance Sheet as of December 31, 2019
Cash
$
13,450
Accounts payable
$
23,986
Accounts receivable
18,981
Inventory
13,807
Current assets
$
46,238...
Marimarsh Corporation reported the following pretax financial income (loss) for the years 2019 to 2021. 2019...
Marimarsh Corporation reported the following pretax financial
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2019
$150,000
2020
($400,000)
2021
$200,000
Pretax financial income (loss) and taxable income (loss) were
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At the end of last year, Roberts Inc. reported the following income statement (in millions of...
At the end of last year, Roberts Inc. reported the following
income statement (in millions of dollars):
Sales
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Operating costs excluding depreciation
2,450
EBITDA
$550
Depreciation
250
EBIT
$300
Interest
124
EBT
$176
Taxes (25%)
44
Net income
$132
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assembled this information:
Year-end sales are expected to be 5% higher than the $3 billion
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Year-end operating costs, excluding depreciation, are expected
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At the end of last year, Edwin Inc. reported the following income statement (in millions of...
At the end of last year, Edwin Inc. reported the following
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Operating costs (excluding depreciation)
3,048.00
EBITDA
$1,142.00
Depreciation
325.00
EBIT
$817.00
Interest
150.00
EBT
$667.00
Taxes (25%)
166.75
Net income
$500.25
Looking ahead to the following year, the company's CFO has
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Year-end sales are expected to be 6% higher than $4.19 billion
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Year-end operating costs, excluding depreciation, are expected
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Quantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in...
Quantitative Problem: At the end of last year,
Edwin Inc. reported the following income statement (in millions of
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Sales
$4,290.00
Operating costs (excluding depreciation)
3,058.00
EBITDA
$1,232.00
Depreciation
345.00
EBIT
$887.00
Interest
130.00
EBT
$757.00
Taxes (40%)
302.80
Net income
$454.20
Looking ahead to the following year, the company's CFO has
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Year-end sales are expected to be 5% higher than $4.29 billion
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