1. Zigs Industries had the following operating results for 2011: sales = $30,420
ID: 2640537 • Letter: 1
Question
1.
Zigs Industries had the following operating results for 2011: sales = $30,420; cost of goods sold = $20,060; depreciation expense = $5,500; interest expense = $2,940; dividends paid = $1,750. At the beginning of the year, net fixed assets were $17,410, current assets were $5,920, and current liabilities were $3,475. At the end of the year, net fixed assets were $20,960, current assets were $7,390, and current liabilities were $4,050. The tax rate for 2011 was 30 percent.
If no new debt was issued during the year, what is the cash flow to creditors?
If no new debt was issued during the year, what is the cash flow to stockholders? (Negative amount should be indicated by a minus sign.)
$
2.
Billy
Zigs Industries had the following operating results for 2011: sales = $30,420; cost of goods sold = $20,060; depreciation expense = $5,500; interest expense = $2,940; dividends paid = $1,750. At the beginning of the year, net fixed assets were $17,410, current assets were $5,920, and current liabilities were $3,475. At the end of the year, net fixed assets were $20,960, current assets were $7,390, and current liabilities were $4,050. The tax rate for 2011 was 30 percent.
Explanation / Answer
(a) Computation of net income for 2011.We have,
Net Income = Profit before tax x Tax rate
Net income = 1,920 x (1.00 - 0.30) = 1,344
Hence, net income for 2011 = $ 1,344
(b) Computation of Operating Cash Flow for the year 2011. We have,
Operating Cash Flow = Net income during the year + Non-Cash Expenses
Operating Cash Flow = 1,344 + 5,500 = $ 6,844
Hence, Operating Cash Flow for 2011 = $ 6,844
(c) Computation of cash flow from assets for the year 2011.We have,
Step1: Computation of capital spending, We have
Capital spending = Ending Net Fixed Assets - Begenning Net Fixed Assets + Depreciation
Capital Spending = 20,960 - 17,410 + 5,500
Capital Spending = $ 9,050
Step2: Computation of addition toNet Working Capital( NWC).We have,
Additions to NWC = Ending NWC - Begenning NWC
Additions to NWC = (7,390 - 4,050) - (5,920 - 3,475)
Additions to NWC = 3,340 - 2,445 =$ 895
Step3: Computation of Cash flow from Assets.We have,
Cash flow from assets = Operating Cash flow - Capital spending - Additions to NWC
Cash flow from Assets = 6,844 -9,050- 895
Cash flow from Assets = - $ 3,101
(2) Computation of net income of Bill's Exterminators, Inc. We have,
Net income for stockholder = $ 143,000
Dividend paid = $ 75,000
Outstanding Common stock - 100,000 shares
(a) Earning per share = Net Income / Total Outstanding share
Earning per share = 143,000 /100,000 = $ 1.43
(b) Dividend per share = Cash Dividend / Number of outstanding shares
Dividend per share = 75,000/ 100,000
Dividend per share = 0.75 per share
Particulars Amount in $ Sales 30,420 Less: Cost of goods sold (20,060) Gross Profit 10,360 Less: Operating Expenses: Depreciation Expenses (5,500) Interest Expenses (2,940) Profit befor tax 1,920Related Questions
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