e. Assuming you are FisK-averse investor, wourd you preier to hold stock A, stoc
ID: 2656747 • Letter: E
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e. Assuming you are FisK-averse investor, wourd you preier to hold stock A, stock B, or ine portfolio? Why? 2. Calculate NOWC and the missing data in Balance sheet shown below for Tran Enterprises: Assets 2013 $ 200,000 2012 S 170,000 Cash Accounts receivable Inventories 1,400,000 $2,270,000 Total current assets Net fixed assets Total assets S3,064,000 $9,064,000 $1,400,000 3.000.000 3,000,000 Accounts payable $1,090,000 otes payable to bank $2.890,000 Total current liabilities Long-term debt Common stock Retained earnings 580,000 2.580,000 Z870,000 Total liabilities and equity $9,064,000 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in hole or in part.Explanation / Answer
For 2013,
Total current assets = Cash + Accounts receivable + Inventories
3,064,000 = 200,000 + Accounts Receivable + 2,000,000
Hence, Accounts Receivable = $864,000
Total assets = Total current assets + Net fixed assets
9,064,000 = 3,064,000 + Net fixed assets
Net fixed assets = $6,000,000
Total current liabilities = Accounts payable + Notes payable to bank
3,000,000 = 1,400,000 + Notes payable to bank
Hence, notes payable to bank = $1,600,000
Total common equity = Common stock + Retained earnings
3,664,000 = 3,000,000 + Retained earnings
Hence, Retained earnings = $664,000
Total liabilities and equity = Total current liabilities + Long term debt + Total Common equity
9,064,000 = 3,000,000 + Long term debt + 3,664,000
Long term debt = $2,400,000
NOWC = Operating current assets - Operating current liabilities
= 3,064,000 - 1,400,000
= $1,664,000
Here Operating current liabilities are equal to Accounts payables only
For 2012,
Total current assets = Cash + Accounts receivable + Inventories
2,270,000 = 170,000 + Accounts Receivable + 1,400,000
Hence, Accounts Receivable = $700,000
Total assets = Total current assets + Net fixed assets
7,870,000 = 2,270,000 + Net fixed assets
Net fixed assets = $5,600,000
Total current liabilities = Accounts payable + Notes payable to bank
2,890,000 = 1,090,000 + Notes payable to bank
Hence, notes payable to bank = $1,800,000
Total common equity = Common stock + Retained earnings
2,580,000 = Common stock + 580,000
Hence, Common stock = $2,000,000
Total liabilities and equity = Total current liabilities + Long term debt + Total Common equity
7,870,000 = 2,890,000 + Long term debt + 2,580,000
Long term debt = $2,400,000
NOWC = Operating current assets - Operating current liabilities
= 2,270,000 - 1,090,000
= $1,180,000
Here Operating current liabilities are equal to Accounts payables only
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