Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 21QP
a)
Summary Introduction
To calculate: The net income for 2015.
Introduction:
Cash flow refers to the difference between the cash that comes into the business and the cash that goes out of the business. The following are the different types of cash flows in a corporation:
- Cash flow from assets:
It refers to difference between the revenues from the sale of assets and the money invested in purchasing the assets.
- Cash flow to creditors:
It refers to the interest paid to the creditors minus the net fresh debt borrowed by the company.
- Cash flow to stockholders:
It refers to the dividend paid to the shareholders of the company minus the fresh equity raised by the company.
- Operating cash flow:
It refers to the cash flow from operating activities of the firm.
b)
Summary Introduction
To calculate: The operating cash flow for 2015.
c)
Summary Introduction
To calculate: The cash flow from assets for 2015 and the possibility of having negative cash flow from assets.
d)
Summary Introduction
To calculate: The cash flow to creditors and the cash flow to stockholders’.
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Cash flow from assets. Use the data from the following financial statements in tthe popup window, The company paid interest
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The operating cash flow is $ (Round to the nearest dollar)
O Data Table
- X
Partial income Statement Year Ending 2017
Sales revenue
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Cash flow from assets. Use the data from the following financial statements in the popup window, The company paid interest expense of $19,000 for 2017 and had an overall tax rate of 40% for 2017. Find the cash flow from assets for 2017, and break it into its
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The operating cash flow is $
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Data table
Sales revenue
$349,800
Cost of goods sold
$142,000
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$42,900
Selling, general, and administrative expenses
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$45,900
(Click on the following icon in order to copy its contents into a spreadsheet.)
Partial Balance Sheet 12/31/2016
ASSETS
Cash
Accounts receivable
Inventories
LIABILITIES
$16,100 Notes payable
$13,800
$27,800 Accounts payable
$19,100
$47,900 Long-term debt
$189,800
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$368,100 OWNERS' EQUITY
Accumulated depreciation
$142,100 Retained earnings
Intangible assets
$82,000 Common stock
$131,800
(Click on the following icon in…
The company’s total assets at year-end 2016 were CHF 131,900 million. What reasonable conclusions an analyst might make about the companies efficiency, Companies solvency, Liquidity and Profitability?
In millions of CHF
Notes
2018
2017 *
Sales
3
91,439
89,590
Cost of goods sold
(46,070)
(45,571)
Trading operating profit
3
13,789
13,277
Operating profit
13,752
10,156
Profit before taxes, associates and joint ventures
12,991
9,460
Taxes
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Profit for the year
10,468
7,511
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2018
2017 *
Assets
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4,500
7,938
Short-term investments
12
5,801
655
Inventories
6
9,125
9,177
Trade and other receivables
7/12
11,167
12,036
Total current assets
41,003
31,884
Total non-current assets
96,012…
Chapter 2 Solutions
Fundamentals of Corporate Finance
Ch. 2.1 - Prob. 2.1ACQCh. 2.1 - What is liquidity? Why is it important?Ch. 2.1 - What do we mean by financial leverage?Ch. 2.1 - Explain the difference between accounting value...Ch. 2.2 - What is the income statement equation?Ch. 2.2 - Prob. 2.2BCQCh. 2.2 - Why is accounting income not the same as cash...Ch. 2.3 - What is the difference between a marginal and an...Ch. 2.3 - Do the wealthiest corporations receive a tax break...Ch. 2.4 - Prob. 2.4ACQ
Ch. 2.4 - Prob. 2.4BCQCh. 2.4 - Why is interest paid not a component of operating...Ch. 2 - What types of accounts are the most liquid?Ch. 2 - What is an example of a noncash expense?Ch. 2 - The marginal tax rate is the tax rate which...Ch. 2 - Prob. 2.4CTFCh. 2 - Prob. 1CRCTCh. 2 - Accounting and Cash flows [LO2] Why might the...Ch. 2 - Prob. 3CRCTCh. 2 - Operating Cash Flow [LO2] In comparing accounting...Ch. 2 - Prob. 5CRCTCh. 2 - Cash Flow from Assets [LO4] Suppose a companys...Ch. 2 - Prob. 7CRCTCh. 2 - Net Working Capital and Capital Spending [LO4]...Ch. 2 - Prob. 9CRCTCh. 2 - Prob. 10CRCTCh. 2 - Prob. 11CRCTCh. 2 - Earnings Management [LO2] Companies often try to...Ch. 2 - Building a Balance Sheet [LO1] KCCO, Inc., has...Ch. 2 - Building an Income Statement [LO1] Billys...Ch. 2 - Dividends and Retained Earnings [LO1] Suppose the...Ch. 2 - Prob. 4QPCh. 2 - Calculating Taxes [LO3] The Dyrdek Co. had 267,000...Ch. 2 - Prob. 6QPCh. 2 - Calculating OCF [LO4] Ridiculousness, Inc., has...Ch. 2 - Calculating Net Capital Spending [LO4] Bowyer...Ch. 2 - Calculating Additions to NWC [LO4] The 2014...Ch. 2 - Cash Flow to Creditors [LO4] The 2014 balance...Ch. 2 - Cash Flow to Stockholders [LO4] The 2014 balance...Ch. 2 - Prob. 12QPCh. 2 - Market Values and Book Values [LO1] Klingon...Ch. 2 - Prob. 14QPCh. 2 - Using Income Statements [LO1] Given the following...Ch. 2 - Preparing a Balance Sheet [LO1] Prepare a 2015...Ch. 2 - Prob. 17QPCh. 2 - Prob. 18QPCh. 2 - Net Income and OCF [LO2] During 2014, Raines...Ch. 2 - Prob. 20QPCh. 2 - Prob. 21QPCh. 2 - Calculating Cash Flows [LO4] Consider the...Ch. 2 - Net Fixed Assets and Depreciation [LO4] On the...Ch. 2 - Prob. 24QPCh. 2 - Use the following information for Taco Swell,...Ch. 2 - Use the following information for Taco Swell,...Ch. 2 - Prob. 1MCh. 2 - Prob. 2M
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