Question

1. What is the exact amount that account receivables increased during the year? Hint: Use the Statement of Cash Flow.

2. What is the total Cost of Sales for the year?

3. How much did Park Systems invest in radio facilities?

4. What is EBITDA (Net Income before Interest Expense, Taxes, Depreciation and Amortization are deducted)?

5. How much did the company pay down its Note Payable?

Park Systems
Balance Sheet
Years Ended December 31
(in thousands)

Assets
Current Assets
Cash $ 23,283
Accounts Receivable, net 38,316
Prepaid Expenses 3,655
SIM Inventory 6,881
Total Current Assets 72,135

Long-Term Assets
Property & Equipment, net 462,602
Total Assets $ 534,737

Liabilities and Equity
Current Liabilities
Accounts Payable $ 14,807
Accrued Payroll 5,863
Accrued Expenses 14,659
Note Payable, current 26,972
Total Current Liabilities 62,301

Long-Term Liabilities
Note Payable, non-current 296,849
Total Liabilities 359,150

Stockholders Equity
Common Stock 134
Retained Earnings 175,453
Total Stockholders Equity 175,587
Total Liabilities & Stockholders Equity $ 534,737

Park Systems
Income Statement
Years Ended December 31
(in thousands)

Revenues
Data $ 201,663
SIM Subscription 120,998
SMS (texting) 40,333
SIM Purchase & Activation 19,113
Other Revenue 1,053
Total Revenues 383,160

Cost of Sales
GSM Roaming & Local Data 110,915
Carrier SMS Fees 24,200
SIM Manufacturing 8,601
Direct Labor 19,158
Total Cost of Sales 162,873
Gross Profit 220,287

Operating Expenses
Core Telecom Network Ops 66,086
Sales and Marketing 32,575
Research and Development 9,772
Radio Tower Facilities 4,886
General & Administrative 65,149
Total Operating Expenses 178,468

Operating Income 41,818
Investment Income 1,685
Interest Expense (9,715)
Foreign Exchange Gain (Loss) (1,836)
Tax Provision Expense (3,904)
Other Income (Expense) 1,051
Net Income $ 29,100

Park Systems
Statement of Cash Flows
Year Ended December 31
(in thousands)

Operating Activities
Consolidated net income $ 29,100
Adjustments
Depreciation and amortization 4,819
Changes in assets and liabilities:
Accounts receivable (3,483)
Inventory (9,891)
Accounts payable 888
Accrued expenses 20,670
Net cash provided by operating activities 42,103

Investing Activities
Investment in radio facilities (17,102)
Capital Equipment expenditure (5,783)
Net cash (used in) investing activities (22,884)

Financing Activities
Payments on note payable (6,476)
Net cash provided by financing activities (6,476)
Net increase (decrease) in cash and equivalents 12,743
Cash and equivalents, beginning of year 10,540
Cash and equivalents, end of year $ 23,283

Answer 1

Part 1)

The exact amount by which accounts receivables increased during the year is $3,483 (in thousands) or $3,483,000 [refer to operating activities section of the statement of cash flows].

____

Explanation:

In statement of cash flows, an increase in current assets (such as accounts receivable, inventory, etc.) is reported as a negative amount. Therefore, a negative value of accounts receivable indicates an increase in its value during the year with an amount of $3,483 (in thousands).

_____

Part 2)

Total Cost of Sales for the year is $162,873 (in thousands) or $16,2873,000 [refer to income statement].

_____

Part 3)

The amount invested by Park Systems in radio facilities is $17,102 (in thousands) or $17,102,000 [refer to investing activities section of the statement of cash flows].

____

Explanation:

In statement of cash flows, purchase of fixed assets or long term investments (such as investment in plant, machinery, equipment, etc.) is reported as a negative amount under the cash flow from investing activities. Therefore, a negative amount of $17,102 (in thousands) indicates that the company has invested this amount in radio facilities.

_____

Part 4)

The value of EBITDA (Net Income before Interest Expense, Taxes, Depreciation and Amortization are deducted) is calculated as follows:

EBITDA = Operating Income (from Income Statement) + Depreciation and Amortization Expense (from Statement of Cash Flows) = 41,818 + 4,819 = $46,637 (in thousands) or $46,637,000

_____

Part 5)

The amount paid by the company on its note payable is $6,476 (in thousands) or $6,476,000 [refer to financing activities section of the statement of cash flows].

____

Explanation:

In statement of cash flows, any amount paid by the company towards its long term debt (such as note payable, long term loan, bonds payable, etc.) is reported as a negative amount under the cash flow from financing activities. Therefore, a negative value of $6,476 (in thousands) indicate that the company has paid this much amount on its note payable.