FCF_7thE_Chapter02

8/11/2019 FCF_7thE_Chapter02

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Chapter 2Problems 2,3,4,6,7,8,14,15,19,25,26

Input boxes in tan

Output boxes in yellow

Given data in blue

Calculations in red

Answers in green


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sh dividends = -$

ck outstanding = #DIV/0!

n stock outstanding = #DIV/0!


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Chapter 2Questions 6,7

Input area:

2004 Taxable income -$

Taxable income0 - 50,00050,001 - 75,00075,001 - 100,000100,001 - 335,000335,001 - 10,000,00010,000,001 - 15,000,000

15,000,001 - 18,333,33318,333,334 +

Output area:

Taxes:0% -$0% 00% 0

0% 00% 00% 0

0% 00% 0

-$

Average tax rate: -$ = #DIV/0!

0

The marginal tax rate is 39%.


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Chapter 2Question 8

Input area:

SalesCostsDepreciation ExpenseInterest Expense

Tax rate

Output area:

Income Statement

Sales -$Costs -

Depreciation expense -EBIT 0Interest expense -$EBT -$Taxes -$Net income -$

Operating cash flow = EBIT + Depreciation - Taxes = -$


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Chapter 2Questions 14

Input area:

SalesCostsOther expensesDepreciation expenseInterest expenseTaxesDividends

2004 New equityNet new long-term debtChange in fixed assets

Output area:

Income Statement

Sales -$Costs -

Depreciation expense -Other expenses -EBIT 0Interest expense -$EBT -$

Taxes -Net income -$

Dividends -$

Addition to retained earnings -$

a. Operating cash flow -$

b. Cash flow to creditors -$

c. Cash flow to stockholders -$

d. Cash flow from assets -$

Net capital spending -

Change in NWC -$


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Input area:

SalesCostsInterest expense

Tax rate

Dividends paidAddition to retained earnings

Output area:

Income Statement

Sales -$Costs -

Depreciation expense -$

EBIT 0Interest expense -$EBT -$

Taxes -Net income -$

Dividends -$

Addition to retained earnings -$


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Input area:

SalesCosts

Administrative and selling expensesDepreciation expenseInterest expense

Tax rate

Output area:

Income Statement

Sales -$Costs -

Administrative and selling expenses -

Depreciation expense -EBIT 0Interest expense -$EBT -$

Taxes 0a. Net income -$

b. Operating cash flow -$

c. Net income was negative because of the tax deductibility and

interest expense. However, the actual cash flow from operations

was positive because depreciation is a non-cash expense andinterest is a financing, not an operating, expense.


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Input area:

2004 2005SalesDepreciationCost of goods soldOther expensesInterestCashAccounts receivableShort-term notes payableLong-term debtNet fixed assetsAccounts payableInventory

Dividends

Tax rate

Output area:

Cash -$ Accounts payable -$

Accounts receivable - Notes payable 0Inventory - Current liabilities -$

Current assets -$Long-term debt -$

Net fixed assets -$ Owners' equity 0Total assets -$ Total liab. & equity -$

Cash -$ Accounts payable -$Accounts receivable - Notes payable 0Inventory - Current liabilities -$Current assets -$

Long-term debt -$Net fixed assets -$ Owners' equity 0Total assets -$ Total liab. & equity -$

Balance sheet as of Dec. 31, 2005

Balance sheet as of Dec. 31, 2004


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Sales -$Costs -Other expenses -Depreciation 0.00

EBIT -$Interest 0.00EBT -$Taxes -Net income -$

Dividends -$Addition to retained earnings 0.00

Sales -$Costs -Other expenses -Depreciation 0.00EBIT -$Interest 0.00EBT -$Taxes -Net income -$


2004 Income Statement



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Input area:

2004 2005Sales -$ -$Depreciation 0 0Cost of goods sold 0 0Other expenses 0 0Interest 0 0Cash 0 0Accounts receivable 0 0Short-term notes payable 0 0Long-term debt 0 0Net fixed assets 0 0Accounts payable 0 0Inventory 0 0

Dividends 0 0

Tax rate 0% 0%

From Problem 25:

Owners' equity -$ -$

Output area:

Sales -$Costs -

Other expenses -Depreciation -

EBIT -$Interest -EBT -$Taxes -Net income -$


Operating cash flow = EBIT + Depreciation - Taxes = -$Change in NWC = 2005 NWC - 2004 NWC = 0.00Net capital spending = 2005 NFA - 2004 NFA + Depreciation = 0.00

Cash flow from assets = OCF - Change in NWC - Net capital spending = -$

Net new long-term debt = 2005 long-term debt - 2004 long-term debt = -$



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Cash flow to creditors = Interest - Net new long-term debt = -$

Net new equity = 2005 OE - 2004 OE - 2005 Addition to retained earnings = -$

Cash flow to stockholders = Dividends - Net new equity = -$

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