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Category: Business and Industry
Date Submitted: 08/30/2010 09:27 PM
Statement of Retained Earnings (2009)
Balance of Retained Earnings 12/31/08 $203,768
Add: Net Income 2009 (160,176)
Less: Dividends paid (11,000)
Balance of Retained Earnings 12/31/09 32,592
3-3 In its most recent financial statements, Newhouse Inc. reported $50 million of net
Statement of income and $810 million of retained earnings. The previous year, its balance
related earnings sheet showed $780 million of retained earnings. What were the total dividends paid to shareholders during the most recent year?
Did the expansion create additional net operating profits after taxes (NOPAT)?
NOPAT = EBIT (1 – Tax rate)
NOPAT09 = -$130,948(1 – 0.4)
= -$130,948(0.6)
= -$78,569
NOPAT08 = $114,257
What effect did the expansion have on net operating working capital?
NOWC = Current - Non-interest
Assets (cash + Acct Rec + Inv) bearing Current Liabilities
(Acct pay + Accruals)
NOWC09 = ($7,282 + $632,160 + $1,287,360) – ($544,160 + $489,600)
= $893,042
NOWC08 = $842,400
What effect did the expansion have on operating capital?
Operating capital = NOWC + Net Fixed Assets
Operating Capital09 = $893,042 + $939,790
= $1,832,832
Operating Capital08 = $1,187,200
What is your assessment of the expansion’s effect on operations?
What effect did the expansion have on net cash flow and operating cash flow?
NCF09 = NI + Dep = ($160,176) + $116,960
= -$43,216
NCF08 = $87,960 + $18,900 = $106,860
Kendall Comers Inc. recently reported net income of $3.1 million. The company's
Net cash flow depreciation expense was $500,000. What is the company's approximate net cash flow? Assume the firm has no amortization expense.
OCF09 = NOPAT + Dep
= ($78,569) + $116,960
= $38,391
OCF08 = $114,257 + $18,900
= $133,157
The Klaven Corporation has operating income (EBIT) of...