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In: Finance

Use the information in the table below to construct an income statement for 2015 and balance...

Use the information in the table below to construct an income statement for 2015 and balance sheets for 2014 and 2015.  Then, find Operating Cash Flow, change in Net Working Capital, Net Capital Spending, Cash Flow to Creditors, Cash Flow to Shareholders, and Free Cash Flow.  The tax rate is 34% and the plowback ratio is 60%.

2014

2015

Sales

1700

Costs of Goods Sold

650

Depreciation Expense

200

Interest Expense

75

Total Fixed Assets

2200

3300

Accumulated Depreciation

400

Can be determined from the information provided

Total Current Assets

550

650

Total Current Liabilities

400

500

Long-term Debt

600

700

Common Stock

600

Can be determined from the information provided.

Solutions

Expert Solution

2015
$ $
Sales                1,700.00
Less: Cost of goods sold                  (650.00)
Gross income            1,050.00
Less: Depreciation expenses             (200.00)
Less: Interest expenses               (75.00)
Net income               775.00
Less: Tax @ 34%             (263.50)
Net income after tax               511.50
Add: Depreciation expenses               200.00
Operating cash flow               711.50
               2,014.00            2,015.00
Current Assets                    550.00               650.00
Less: Current Liabilities                  (400.00)             (500.00)
Net working capital                    150.00               150.00
changes in net working capital ( $ 150 - $ 150 )                             -  
Ending Fixed Assets for the year 2015                3,300.00
Less: Beginning Fixed Assets for the year 2015              (2,200.00)
Add: Depreciation expenses                    200.00
Net Capital Spending                1,300.00
Interest expenses                      75.00
Beginning Long Term Debt for the year 2015                    600.00
Less: Ending Long term Debt                  (700.00)
Cash flow to creditors                    (25.00)
Plowback ratio                         0.60
Dividend Payout ratio ( 1 - 0.6 )                         0.40
Dividend paid ( $ 511.50 x 40% )                    204.60
Common Stock at the beginning                    600.00
Add: Net income after tax                    511.50
Less: Dividend paid                  (204.60)
Common stock at the end                    906.90
Cash flow to shareholders ( Dividend paid )                    204.60
Operating cash flow                    711.50
Changes in working capital                             -  
Net Capital spending                1,300.00
Cash flow to creditors                    (25.00)
Free Cash flow                1,986.50

Expert Solution


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