Finance

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...