Submitted by: Submitted by seis93
Views: 130
Words: 700
Pages: 3
Category: Business and Industry
Date Submitted: 02/03/2014 07:07 PM
Sixto Castillo, IV
FNCE 3410
Professor D'Sa
January 18, 2014
HW: Pg. 43 1-5, Pg. 47 Mini case 1&2
Pg.43
1. What is the value of the shareholder's equity account for this firm? How much is new working capital?
Current assets of the firm = $4,800
Fixed assets = $27, 500
Current liabilities = $4,200
Long-term debt = $10,500
Answer:
Value of the shareholder's equity account:
Total Assets= Current Assets + Net Fixed Assets
= $4,800 + $27,500
= $32,300
Total liabilities:
Total liabilities = Current liabilities + Long-term debt
Total liabilities = Current liabilities + Long-term debt
= $4,200 + $10,500
=$14,700
Therefore, Total assets = Total liabilities + Shareholder's equity
Shareholder's equity = $32,300 - $14,700
= $17,600
Net working Capital = Current assets - current liabilities
=$4,800 - $4,200 = $600
2. What is the net income for this firm?
Sales of the firm = $734,000
Cost of the firm = $315,000
Depreciation expenses are $48,000
Interest expenses are $35,000
Tax rate is 35%
Calculate the Net Income:
Income Statement |
Sales | | | | $734,000 |
Less: | Costs | | | ($315,000) |
| Depreciation | | ($48,000) |
Earnings before Interest & Tax (EBIT) | $371,000 |
Interest expenses | | | ($35,000) |
Earnings before Tax (EBT) | | $336,000 |
Less: Tax (35%) | | | ($117,600) |
Net Income | | | $218,400 |
3. What is the addition to retained earnings?
Dividends paid by the firm is $85,000
Net Income of the firm is $218,400
Calculate the addition to retained earnings:
Net income - Dividends = Retained earnings
= $218,000 - $85,000
= $133,400
4. What is the earnings per share, or EPS, figure? What is the dividends per share figure?
Common Share of outstanding stock = 110,000
Net income = $218,400
Dividend amount paid by the firm = $85,000
Calculate the Earnings per share (EPS)
EPS = Net income/ Number of common shares outstanding
= $218,400 /...