Widgets, Inc. Use the following information to answer the next ten questions Net
ID: 2654402 • Letter: W
Question
Widgets, Inc. Use the following information to answer the next ten questions
Net Sales: 1000
Cost of Goods Sold: 600
Depreciation: 100
Interest Paid: 30
Dividends Paid: 30
Tax Rate: 35%
Solve for: 1.) EBIT, 2.) Net Income, 3.) Addition to Retained Earnings, 4.) Operating Cash Flow.
Use this additional information about Widgets, Inc. to fill in the blanks:
2010 Net Capital Spending
Ending Net Fixed assets........$500
- Beginning Net Fixed Assets.......$300
+ Depreciation......5.)
Net Captial spending.......6.)
2010 Change in Net Working Capital
2010 Current Assets.......$1600
2010 Current Liabilities.....$1200
2010 Net Working Capital.......7.)
2009 Current Assets.....$1800
2009 Current Liabilities.....$1200
2009 Net Working Capitial......8.)
Change in Net Working Capital......9.)
10.) What is the 2010 Cash Flow from Assets?
Explanation / Answer
Answer: 1. EBIT =Sales -COGS -Depreciation
=$1000-$400-$100
=$300
2.Net income= EBIT -Interest -income tax
=$300-$30-$94.5 (270*35%)
=$175.5
3.Addition to retained earnings =Net income -Dividend paid
=$175.5-$30
=$145.5
4.Operating cash flow =EBIT +Dep - income taxes
=$300+$100-$94.5
=305.5
5.& 6
7. 2010 Net Working Capital=Current asset - current liabilities
=1600-1200
=$400
8.2009 Net Working Capital=Current asset - current liabilities
=1800-1200
=$600
9.Change in Net Working Capital=2010 Net Working Capital-2009 Net Working Capital
=$400-$600
=-$200
10.) What is the 2010 Cash Flow from Assets?
Cash flow from assets =Operating cash flow - Net capital spending -Additions to NWC
=305.5-300-(-200)
=205.5
Particulars Amount ($) Ending Net Fixed assets 500 Less:Beginning Net Fixed Assets 300 Add: Depreciation 100 Net Captial spending 300Related Questions
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