EBK CORPORATE FINANCE
11th Edition
ISBN: 8220102798878
Author: Ross
Publisher: YUZU
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Chapter 2, Problem 22QP
Use the following information for Ingersoll, Inc., for Problems 22 and 23 (assume the tax rate is 34 percent):
| 2014 | 2015 | |
| Sales | $9,402 | $ 10,091 |
| 1,350 | 1,351 | |
| Cost of goods sold | 3,235 | 3,672 |
| Other expenses | 767 | 641 |
| Interest | 630 | 724 |
| Cash | 4,931 | 6,244 |
| Accounts receivable | 6,527 | 7,352 |
| Short-term notes payable | 953 | 895 |
| Long-term debt | 16,152 | 19,260 |
| Net fixed assets | 41,346 | 42,332 |
| Accounts payable | 5,179 | 5,022 |
| Inventory | 11,604 | 11,926 |
| Dividends | 1,147 | 1,261 |
22. Financial Statements Draw up an income statement and
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Answer with explanation, please fast i give you upvote.
Income Statement (2017)
Credit Sales
Cost of Goods Sold
Balance Sheet (2017)
1.500
Cash
?
Accounts Payable
?
Accounts Receivable
Short-Term Debt
125
Long-Term Debt
2.092 Common Stock
Retained Earnings 1.132
Taxable Income
Inventory
Fixed Assets
?
845
Taxes (34%)
Net Income
845
Total
?
Total
?
Dividend (33.33%)
Retained Earnings
?
Main assumptions:
Sales has increased by 25% in 2017.
"Cost of goods sold is 80% of sales in the income statement at all times. All other items are
independent of sales.
Each current asset and accounts payable are fractions of sales in the balance sheet. All other items
are independent of sales.
Current ratio is 3, accounts receivable turnover is 2, inventory turnover is 4, accounts payable
turnover is 5 at all times. Turnovers are calculated with respect to the current period balances
without averaging with past year balances.
Throughout the year 2017:
o the company raised funds through short-term debt first.
o the company raised the remaining funds through…
Income Statement (2016)
Credit Sales
Cost of Goods Sold (800)
Taxable Income
Taxes (34%)
Net Income
Balance Sheet (2016)
Cash
Accounts Receivable
1,000
160 Accounts Payable
440 Short-Term Debt
600 Long-Term Debt
1.800 Common Stock
300
100
800
800
Retained Eamings 1.000
3.000
Inventory
Fixed Assets
Total
3.000 Total
Dividend (33.33%)
Retained Earnings
Main assumplions
Sales are expected to increase by 25% in 2017.
"Cost of goods sold is a fraction of sales in the income statement. All other items are independent
of sales.
Each current asset and accounts payable are fractions of sales in the balance sheet All other
items are independent of sales.
If there is a need for external funding:
o raise funds through short term debt first, but current ratio must not be smaller than 3.
o raise the remaining funds through 50% long-term debt and 50% equity offering (common
stock).
What is the new cash conversion cycle in year 2017? (Let 1 xr = 360 davs)
1 months
3 months
5 months
7 months
Chapter 2 Solutions
EBK CORPORATE FINANCE
Ch. 2 - Prob. 1CQCh. 2 - Prob. 2CQCh. 2 - Prob. 3CQCh. 2 - Prob. 4CQCh. 2 - Prob. 5CQCh. 2 - Cash Flow from Assets Why is it not necessarily...Ch. 2 - Operating Cash flow Why is it not necessarily bad...Ch. 2 - Net Working Capital and Capital Spending Could a...Ch. 2 - Cash Flow to Stockholders and Creditors Could a...Ch. 2 - Prob. 10CQ
Ch. 2 - Building a Balance Sheet Sankey, Inc., has current...Ch. 2 - Building an Income Statement Shellon, Inc., has...Ch. 2 - Market Values and Book Values Klingon Cruisers,...Ch. 2 - Prob. 4QPCh. 2 - Calculating OCF Barrell, Inc., has sales of...Ch. 2 - Calculating Net Capital Spending Gordon Driving...Ch. 2 - Building a Balance Sheet The following table...Ch. 2 - Cash Flow to Creditors The 2014 balance sheet of...Ch. 2 - Cash. Flow to Stockholders The 2014 balance sheet...Ch. 2 - Prob. 10QPCh. 2 - Cash Flows Ritter Corporations accountants...Ch. 2 - Financial Cash flows The Stancil Corporation...Ch. 2 - Building an Income Statement During the year, the...Ch. 2 - Calculating total Cash Flows Schwert Corp. shows...Ch. 2 - Using Income Statements Given the .following...Ch. 2 - Prob. 16QPCh. 2 - Marginal versus Average Tax Rates (Refer to Table...Ch. 2 - Prob. 18QPCh. 2 - Accounting Values versus Cash Flows In Problem 18,...Ch. 2 - Calculating Cash Flows Cusic Industries had the...Ch. 2 - Prob. 21QPCh. 2 - Use the following information for Ingersoll, Inc.,...Ch. 2 - Prob. 23QPCh. 2 - Prob. 24QPCh. 2 - Net Fixed Assets and Depreciation On the balance...Ch. 2 - Prob. 26QPCh. 2 - Prob. 1MCCh. 2 - Prob. 2MCCh. 2 - Prob. 3MC
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