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In: Finance

   BALANCE SHEET ASSETS LIABILITY AND EQUITY CASH 23    ACCOUNTS PAYABLE 1,245 CASH EQUIVALENTS 435...

   BALANCE SHEET

ASSETS LIABILITY AND EQUITY

CASH 23    ACCOUNTS PAYABLE 1,245
CASH EQUIVALENTS 435 ACCRUED EXPENSES 1,549
ACCOUNTS RECEIVABLE 1,827 DEFFERED TAX LIABILITY 712
INVENTORY 2,876
PROPERTY,PLANT, EQUIP 3,567 LONG-TERM DEBT 3,678
TOTAL ASSESTS 8,728 PREFFERED STOCK 432
COMMON EQUITY 1,112
LIABILITIES AND EQUITY $8,728

INCOME STATEMENT

REVENUES 7,493
OPERATING EXPENSES 6,321
INTEREST EXPENSE 221
INCOME BEFORE TAX 951
INCOME TAX 295
NET INCOME 656
PREFFERED DIVIDENDS 26
NET INCOME AVAILABLE TO COMMON 630

Reformulate the following balance sheet and income statement for a manufacturing concern. Amounts are in millions. The firm bears a 36 percent statutory tax rate.

Solutions

Expert Solution

?Reformulation of Balance Sheet means classification of assets and liabilites according to their longetvity and on thier utility- operational or financial

Reformulated Balance Sheet

?Operating Assets

Property?, Plant, Equipment $3567
Inventories $2876
Account Recievables $1827

??Operating Liabilites

Deffered Tax Liability $712
Accounts Payable $1245
Accrued Expenses $1549

?Net Operating Assets: $4764?

Financial Obligation Long Term Debt $3678 Preferred Stock $432 ?Total Financial Obligation $4110 ?Financial Assets Cash Equivalents $435 Cash $23 ?Net FInancial Obligation $3652 ?Equity $1112 ?Reformulated Income Statement Revenues $7,493 Cost of Sales - Gross Margin $7,493 Operating Expense ($6,321) Operating Income from Sales $1,172 Tax on Operating Income @ 36% (421.92) Tax Benefits on Net Interest Expense @ 36% 57.46 Operating Income after Tax 807.54 Net Financial Expense Interest Expense 221 Preferred Dividends 26 Income to Equity Shareholders ?560.54

jeff jeffy answered 3 years ago
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