Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
9th Edition
ISBN: 9781305635937
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Chapter 3, Problem 17P

a.

Summary Introduction

To compute: The net operating working capital for 2015 and 2016.

Balance sheet:

Balance sheet is a part of the financial statements that lists the company’s assets, liabilities and shareholders’ fund. It is prepared at last of the accounting period and informs about company’s financial position on that day.

Income Statement:

A part of the financial statements that lists the income and expenses of business for an accounting year is called income statement. It is prepared at the end of accounting period to know the profitability of the` business.

b.

Summary Introduction

To compute: The free cash flow in 2016 for Company P.

Free Cash Flow:

The cash generated over and above required by business operations and capital expenditure is called free cash flow. Statement of cash flow reports the cash flow generated or consumed by the business.

c.

Summary Introduction

To explain: The large increase in dividends in 2016.

Balance sheet:

Balance sheet is a part of the financial statements that lists the company’s assets, liabilities and shareholders’ fund. It is prepared at last of the accounting period and informs about company’s financial position on that day.

Income Statement:

A part of the financial statements that lists the income and expenses of business for an accounting year is called income statement. It is prepared at the end of accounting period to know the profitability of the` business.

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Fundamentals of Financial Management, Concise Edition (MindTap Course List)

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