Xacc 280 Week 3
Chapter 3
Problem 3
Operating Activities:
Net Income
$5,560
Depreciation
$4,268
Change in Working Capital
$1,397
Cash from Operating Activities
$11,225
Investing Activities:
Increased in Fixed Assets
($6,068)
Cash from Investing Activities
($6,068)
Financing Activities:
Decrease in Debt
($7,655)
Dividends Paid
($2,900)
New Stock Sold
$4,800
Cash from Financing Activities
($5,755)
Net Cash Flow
($598)
Beginning Cash Flow
$3,245
Net Cash Flow
($598)
Ending Cash
$2,647
Problem 12
a.
Linden
%
Industry
%
Sales
6,000
100
64,000
100
Cost of Goods Sold
3,200
53.3
33,650
52.6
Gross Margin
2,800
47.7
30,350
47.4
Expenses:
Sales and Marketing
430
7.2
3,850
6
Engineering
225
3.8
2,650
4.1
Finance and Administration
650
10.8
4,560 …show more content…
As you can see in the Linden percentage columns they are significantly less profitable than the Industry. With the EBIT we can see that Linden is less profitable than the industry standard. Linden has a very good interest rate, because its borrowing less, in the end that could hurt them in terms of leveraging the return on equity. Look for excessive executive salaries and bonuses, lavish travel and entertainment expenses, money spent on acquiring other companies, and any other expenditures that aren’t strictly necessary to run the business.
Problem 22
Income Statement
Revenue
$6,000,000
Cost of Goods Sold
$3,600,000
Gross Margin
$2,400,000
Expense
$160,000
EBIT
$1,280,000
Interest
$160,000
EBT
Tax
EAT
Balance Sheet
Current Assets
$400,000
Current Liabilities
$400,000
Fixed Assets
$4,000,000
Long term debt
$2,000,000
Total Assets
Problem 3
Operating Activities:
Net Income
$5,560
Depreciation
$4,268
Change in Working Capital
$1,397
Cash from Operating Activities
$11,225
Investing Activities:
Increased in Fixed Assets
($6,068)
Cash from Investing Activities
($6,068)
Financing Activities:
Decrease in Debt
($7,655)
Dividends Paid
($2,900)
New Stock Sold
$4,800
Cash from Financing Activities
($5,755)
Net Cash Flow
($598)
Beginning Cash Flow
$3,245
Net Cash Flow
($598)
Ending Cash
$2,647
Problem 12
a.
Linden
%
Industry
%
Sales
6,000
100
64,000
100
Cost of Goods Sold
3,200
53.3
33,650
52.6
Gross Margin
2,800
47.7
30,350
47.4
Expenses:
Sales and Marketing
430
7.2
3,850
6
Engineering
225
3.8
2,650
4.1
Finance and Administration
650
10.8
4,560 …show more content…
As you can see in the Linden percentage columns they are significantly less profitable than the Industry. With the EBIT we can see that Linden is less profitable than the industry standard. Linden has a very good interest rate, because its borrowing less, in the end that could hurt them in terms of leveraging the return on equity. Look for excessive executive salaries and bonuses, lavish travel and entertainment expenses, money spent on acquiring other companies, and any other expenditures that aren’t strictly necessary to run the business.
Problem 22
Income Statement
Revenue
$6,000,000
Cost of Goods Sold
$3,600,000
Gross Margin
$2,400,000
Expense
$160,000
EBIT
$1,280,000
Interest
$160,000
EBT
Tax
EAT
Balance Sheet
Current Assets
$400,000
Current Liabilities
$400,000
Fixed Assets
$4,000,000
Long term debt
$2,000,000
Total Assets