Corporate Finance

Financial statements – exercises

1. Complete the following balance sheet:

|Asset |Capital |

|Current assets | |Total liabilities | |

|Cash |100 |Short-term liabilities | |

|Inventory | |Accounts payable |200 |

|Fixed assets | |Notes payable |300 |

|Gross plant and equipment |1800 |Long-term liabilities | |

|Accumulated depreciation | |Equity capital | |

|Net plant and equipment |1500 |Common equity |1000 |

|Total assets |2000 |Total liabilities & equity | |

2. Calculate the amount of retained earnings:

- common stock dividends are 40% of earnings available to common shareholders

- earnings before taxes are 3 000 euro

- preferred dividends are 200 euro

- income tax rate is 30%

3. Construct the statement of cash flows given the following information:

- 10 000 euro in new long-term debt is issued

- 30 000 euro of common stock is repurchased

- Common stock divdends re 15 000 euro

- Current assets are increased by 20 000 euro

- Current liabilities are decreased by 40 000 euro

- Depreciation is 10 000 euro

- Net income is 100 000 euro

- Plant & equipment...