10. 200 poins 2.00 points Refer to the following finarcial statements for Crosby

Question

10. 200 poins 2.00 points Refer to the following finarcial statements for Crosby Corporation CROSBY CORPORATI Incomse Statement For the Year Ended December 31, 20x2 Sales Cost of goods sold 4 050 000 Gross proft Seling and administrative expanse Depreciation expanse 2,690,00D 652.000 442 0 Operating income Interest expense 88.300 Earnings before taxes Taxas Earnings after texes Preferred stock dividends Earmings avañlable to common stockholders Shares outstanding 10.000 233.700 Earmings per share 1.56 Statement of Retained Eamings For the Year Ended Dscember 31 2 Ratained saningn, bsiance Jaruary 1. 20x2 Add Deduct available to common stockholdars 20 dividands daclared and pals in 20x2 200.900 233 708 Retained eamings balance Decembar 31 20X2

Explanation / Answer

a Prepare a statement of Cash flows for the Crosby Corporation CROSBY CORPORATION Statement of Cash flows For the Year Ended December 31, 20X2 Cash flows from operating activities Profit before taxation $353,700 Adjustments for: Depreciation $266,000 Amortization of copyrights Gain on Sale of Equipment Working capital changes: Increase in Accounts Receivable ($9,000) Increase in inventories ($23,000) Decrease in Prepaid Rent $26,100 Increase in Accounts Payable $345,000 649000-304000 Decrease in Accrued Expenses ($19,300) 52100-71400 Taxes Paid ($110,000) Cash generated from operations Net cash from operating activities 829500 Cash flows from investing activities Proceeds from Investments $3,500 Purchase of Plant and Equipment ($710,000) Net cash used in investing activities -706500 Cash flows from financing activities Issue of Bonds $125,000 236000-111000 Payment of short-term notes payable Dividend paid - Common Stock ($219,000) Dividend paid - Preferred Stock ($10,000) Net cash used in financing activities ($104,000) Net increase in cash and cash equivalents 19000 Cash and cash equivalents at beginning of period 107000 Cash and cash equivalents at end of period 126000 b Compute the book value per common share for both 20X1 and 20X2 for the Crosby Corporation Book Value Per share = Shareholder's Equity/Total Shares Outstanding Book Value Per share = ($790900-$90000)/($150000/1) $700900/150000 700900 Book Value per share 20X1 4.67 Book Value Per share = ($805600-$90000)/($150000/1) $715600/150000 715600 Book Value per share 20X2 4.77 Book Value 20X1 $4.67 20X2 $4.77 c The details for 20X1 is not available to calculate the PE ratio Market Price - 3.3*4.77 15.741 PE Ratio Market Price/Earnings 15.741/1.56 PE Ratio 10.09 times

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