During 2009, Raines Umbrella Corp. had sales of $745,000. Cost of goods sold, ad

Question

During 2009, Raines Umbrella Corp. had sales of $745,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $567,000, $88,000, and $126,000, respectively. In addition, the company had an interest expense of $95,000 and a tax rate of 40 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corp. paid out $19,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt?

Explanation / Answer

sales     745,000 COGS     567,000 Admin        88,000 Selling exp     126,000 int exp        95,000 PBT (131,000) tax rate     (52,400) PAT     (78,600) Dividend paid     (19,000) long term debt     (97,600)

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