Question

In: Finance

Given the following financial statements for ARGON Corporation Income Statement Year Ended 12/31/18 Sales $1,300,000 Cost...

Given the following financial statements for ARGON Corporation

Income Statement
Year Ended 12/31/18
Sales	$1,300,000
Cost of Goods Sold	750,000
Operating Expenses	200,000
Depreciation Expense	100,000
EBIT	250,000
Interest Expense	50,000
EBT	200,000
Taxes (40%)	80,000
Net Income	$120,000

Balance Sheet
	12/31/2018	12/31/2017
Current Assets	$50,000	$45,000
Fixed Assets	430,000	350,000
Total Assets	$480,000	$395,000

Current Liabilities	$35,000	$50,000
Long-term Debt	330,000	270,000
Common Stock	5,000	5,000
Retained Earnings	110,000	70,000
Total Liabilities & Equity	$480,000	$395,000

What is ARGON’s FCF?

		$40,000
		$50,000
		-$15,000
		-$20,000

Expert Solution

Compute the working capital for year 2017, using the equation as shown below:

Working capital = Current assets – Current liabilities

= $45,000 - $50,000

= ($5,000)

Hence, the working capital is ($5,000).

Compute the working capital for the year 2018, using the equation as shown below:

Working capital = Current assets – Current liabilities

= $50,000 - $35,000

= $15,000

Hence, the working capital is $15,000.

Compute the increase in working capital, using the equation as shown below:

Increase in working capital = Working capital for 2018 – Working capital for 2017

= $15,000 – ($5,000)

= $20,000

Hence, the increase in the working capital is $20,000.

Compute the capital expenditure, using the equation as shown below:

Capital expenditure = Closing fixed assets + Depreciation – Opening fixed assets

= $430,000 + $100,000 - $350,000

= $180,000

Hence, capital expenditure is $180,000.

Compute the net operating profit after taxes (NOPAT), using the equation as shown below:

NOPAT = EBIT*(1 – Tax rate)

= $250,000*(1 – 0.40)

= $150,000

Hence, NOPAT is $150,000.

Compute the free cash flow, using the equation as shown below:

Free cash flow = NOPAT + Depreciation – Increase in working capital – Capital expenditure

= $150,000 + $100,000 - $20,000 - $180,000

= $50,000

Hence, the free cash flows are $50,000.

jeff jeffy answered 1 year ago

ABC Company Income Statement For the 12 month period ended 12/31/2016 Net Sales Cost of Sales...

ABC Company Income Statement For the 12 month period ended 12/31/2016 Net Sales Cost of Sales $ 450,000 Gross Profit $ 500,000 Operating Expenses: Depreciation $ 75,000 Amortization $ 25,000 Other Operating Expenses Total Operating Expenses $ 400,000 Income From Operations Interest Expense Net Income Before Taxes $ 80,000 Taxes- 30% Net Income EBITDA

Leslie corporation reported the following income statement and financial information for the year just ended Sales...

Leslie corporation reported the following income statement and financial information for the year just ended Sales 3,300,000 Average invested assets 3,000,000 CGS 1,700,000 Average current liabilities 200,000 Gross Margin 1,600,000 income tax rate 30% Selling and Admin 200,000 Operating income before support dept charged 1,400,000 capital debt at 8% average interest rate 600,000 Support Dept Charge 100,000 Equity dividend rate at 20% 1,800,000 Income from operations 1,300,000 The company uses GAAP operating income and assets net of current liabilities for...

The Duckworth Ltd. 20X5 financial statements include the following: Statement of comprehensive income Year ended 31...

The Duckworth Ltd. 20X5 financial statements include the following: Statement of comprehensive income Year ended 31 December 20X5 Earnings from continuing operations $ 3,196,000 Discontinued operations (net of tax) 502,000 Net earnings and comprehensive income $ 3,698,000 Statement of financial position 31 December 20X5 Bonds payable, 7%, nonconvertible $ 11,400,000 Preferred shares, no-par value, $1.04, nonconvertible, noncumulative, outstanding during year, 640,000 shares 11,400,000 Common shares, no-par value: Outstanding 1 Jan., 35,400,000 shares $ 7,290,000 Sold and issued 1 April, 3,310,000...

Sigma plc’s income statement for the year ended 31 March 2020 and the statements of financial...

Sigma plc’s income statement for the year ended 31 March 2020 and the statements of financial position as at 31 March 2019 and 2020 are provided below. Income Statement for the year ended 31 March 2020 £m Revenue 600 Cost of Sales (360) Gross Profit 240 Administrative expenses (90) Distribution expenses (60) Operating Profit (PBIT) 90 Interest income 12 Interest expense (36) Profit before Tax 66 Taxation (15) Profit for the year 51 Statements of Financial Position as at 31...

Straightarm Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/24 and 12/31/25...

Straightarm Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/24 and 12/31/25 contained the following errors: 2024 2025 Ending inventory $15,000 understatement $24,000 overstatement Depreciation expense $6,000 understatement $12,000 understatement Failed to record Unearned Revenue at 12/31/25: $7,000 Straigtharm declared a cash dividend of $11,000 on 12/31/25. No journal entry was made in 2025. The dividend was paid on 1/3/26; Straightarm debited Retained Earnings and credited Cash. 12/31/26 Total Stockholders’ Equity is in error by: Select...

Prepare the following January financial statements: a) Income Statement for month ended January 31 b) Statement...

Prepare the following January financial statements: a) Income Statement for month ended January 31 b) Statement of Stockholders Equity for month ended January 31 c) Balance Sheet as of January 31 d) Statement of Cash Flows for month ended January 31 e) Record January closing transactions in the General Journal and post to the General Ledger. f) Prepare a post-closing trial balance as of January 31. January Transactions 1-Jan Performed car repair services and received cash at the time of...

_______________________________________________________________________ JETER CORPORATION Income Statement For the Year Ended December 31, 2019 Sales.......................................................................................... $ 3,300,000 Co

_______________________________________________________________________ JETER CORPORATION Income Statement For the Year Ended December 31, 2019 Sales.......................................................................................... $ 3,300,000 Cost of goods sold.................................................................... 1,950,000 Gross profits....................................................................... 1,350,000 Selling and administrative expense.......................................... 650,000 Depreciation expense................................................................ 230,000 Operating income................................................................ 470,000 Interest expense........................................................................ 80,000 Earnings before taxes......................................................... 390,000 Taxes......................................................................................... 140,000 Earnings after taxes............................................................ 250,000 Preferred stock dividends............................................................ 10,000 Net Income Available to Common Shareholders..................... $ 240,000 Shares outstanding.................................................................. 150,000 Current Stock Price................................................................... $ 16.00 _______________________________________________________________________ _______________________________________________________________________...

Income Statement For the Year Ended December 31, 2014 Revenue: Sales $ 792,845 Cost of Goods...

Income Statement For the Year Ended December 31, 2014 Revenue: Sales $ 792,845 Cost of Goods Sold $ 275,000 Gross Profit $ 517,845 Operating Expenses: Depreciation Expense $ 35,159 Insurance Expense $ 82,000 Office Expense $ 21,700 Advertising Expense $ 8,400 Utilities Expense $ 31,000 Wage Expense $ 80,350 Bad Debt Expense $ 25,000 Pension Expense $ 40,000 Income from Operations: $ 194,236 Other Revenue: Rent Revenue $ 12,000 Interest Revenue $ 19,561 Other Expenses: Unrealized Holding G/L $ (8,000)...

Income Statement for the year ended December 31, 2020 (millions of $) Revenue (sales) $773 Cost...

Income Statement for the year ended December 31, 2020 (millions of $) Revenue (sales) $773 Cost of goods sold 595 Selling, general, and administrative expenses* 130 Loss on disposal of plant** 6 Interest expense 12 Income tax expense 10 Net income $ 20 *Includes depreciation expense of $30 million, insurance expense of $8 million, bad debt expense of $6 million, and salaries expense of $86 million. ** During 2020, the company purchased two pieces of equipment costing a total...

Given is the Income Statement for the year ended December 31, 20XX, Statement of Retained Earnings for the year ended December 31, 20XX

Given is the Income Statement for the year ended December 31, 20XX, Statement of Retained Earnings for the year ended December 31, 20XX and Comparative Balance Sheets for 20XW and 20XX of Maris Corporation: Maris CorporationIncome StatementYear Ended December 31, 20XX Sales$3,800,000 Cost of goods sold2,250,000 Gross profits1,550,000 Selling and administrative expense540,000 Amortization expense200,000 Operating income810,000 Interest expense43,000 Earnings before taxes767,000 Taxes440,000 Earnings after taxes327,000 Preferred stock dividends30,000 Earnings available to common shareholders$297,000 Shares outstanding198,000 Earnings per share$1.50 Statement of...