Answer the following questions regarding the given Balance Sheet and Income Stat
ID: 2730765 • Letter: A
Question
Answer the following questions regarding the given Balance Sheet and Income Statement for a fictitious company. ($ in millions). Solve questions (a) (b) (c) and (d) below.
Balance sheet as of Dec. 31, 2010
Cash
$ 6,067
Accounts payable
$ 4,384
Accounts receivable
8,034
Notes payable
1,171
Inventory
14,283
Current liabilities
$ (1)
Current assets
$28,384
Long-term debt
$20,320
Net fixed assets
$50,888
Owners' equity
$53,397
Total assets
$79,272
Total liab. & equity
$79,272
Balance sheet as of Dec. 31, 2011
Cash
$ 6,466
Accounts payable
$ 4,644
Accounts receivable
9,427
Notes payable
1,147
Inventory
15,288
Current liabilities
$ 5,791
Current assets
$31,181
Long-term debt
$24,636
Net fixed assets
$54,273
Owners' equity
$55,027
Total assets
$85,454
Total liab. & equity
$85,454
2010 Income Statement 2011 Income Statement
Sales
$ (2)
Sales
$12,936.00
COGS
3,979.00
COGS
4,707.00
Other expenses
946.00
Other expenses
824.00
Depreciation
1,661.00
Depreciation
1,736.00
EBIT
$ 4,987.00
EBIT
$ 5,669.00
Interest
776.00
Interest
926.00
EBT
$ 4,211.00
EBT
$ 4,743.00
Taxes (34%)
1,431.74
Taxes (34%)
1,612.62
Net income
$ 2,779.26
Net income
$ 3,130.38
Dividends
$1,411.00
Dividends
$ (3)
Additions to RE
1,368.26
Additions to RE
1,512.38
(5 points) Fill in the three blanks.
Suppose we are analyzing the cash flows occurred during 2011, answer (b) and (c).
(10 points) Calculate the OCF, NCS, and Changes in NWC. What is the CFFA?
(10 points) Calculate the CFC (cash flow to creditors) and CFS (cash flow to shareholders). Does the cash flow identity hold?
(10 points) Prepare the Pro Forma Income Statement for 2012 assuming the same sales growth rate as in 2011 using percentage of sales method. Depreciation, interest and divided payout ratio are assumed to be the same as in 2011.
Balance sheet as of Dec. 31, 2010
Cash
$ 6,067
Accounts payable
$ 4,384
Accounts receivable
8,034
Notes payable
1,171
Inventory
14,283
Current liabilities
$ (1)
Current assets
$28,384
Long-term debt
$20,320
Net fixed assets
$50,888
Owners' equity
$53,397
Total assets
$79,272
Total liab. & equity
$79,272
Balance sheet as of Dec. 31, 2011
Cash
$ 6,466
Accounts payable
$ 4,644
Accounts receivable
9,427
Notes payable
1,147
Inventory
15,288
Current liabilities
$ 5,791
Current assets
$31,181
Long-term debt
$24,636
Net fixed assets
$54,273
Owners' equity
$55,027
Total assets
$85,454
Total liab. & equity
$85,454
Explanation / Answer
Fill in the blanks:
1. $5555
2. $11573
3. $1618
OCF = $5669 - 1612.62 + 1736 = $5792.38
NCS = $54273 - $50888 + $1736 = $5121
Change in NWC = (31181 - 5791) - (28384 - 5555) = $2561
CFFA = OCF - NCS - Change in NWC = $5792.38 - $5121 - $2561 = - $1889.62
Cash Flow to Creditors = 926 - (24636 - 20320) = - $3390
Cash Flow to Shareholders = 1618 - (55027 - 53397) = - $12
Performa Income Statement for 2012:
Sales 12936 + 1523 (i.e.11.78%) = $14459 COGS 4707 + 554 (i.e.11.78%) = 5261 Other Expenses 824 + 97 (i.e.11.78%) = 921 Depreciation same as 2011 1736 EBIT 6541 Interest same as 2011 926 EBT 5615 Taxes 5615 * 34%= 1909 Net Income $3706 Dividends payout ratio same as 2011 $1916 Additions to RE $1790Related Questions
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