Questions-Financial Statements

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Presentation transcript:

Questions-Financial Statements

Q1) Barrett, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300. If the tax rate is 35 percent, what is the operating cash flow, or OCF?

OCF = EBIT + Depreciation – Taxes

Q2) Gordon Driving School’s 2014 balance sheet showed net fixed assets of $3.2 million, and the 2015 balance sheet showed net fixed assets of $3.8 million. The company’s 2015 income statement showed a depreciation expense of $235,000. What was the company's net capital spending for 2015?

Net capital spending = NFAend – NFAbeg + Depreciation

Q3) Ritter Corporation’s accountants prepared the following financial statements for year-end 2015. OFCF? FCF?

OFCF=EBIT-Tax+Depreciation-CAPEX-ΔWC EBIT: NI-COGS-SG&A-Depreciation:860-620-101=139 Tax: 0 CAPEX=ΔLT Assets: 401-381=20 +101=121 (Since everything is NET… In other words, Depreciation is taking care of, I have to add back depreciation) ΔWC=WC(2015)-WC(2014)=(87+192-147)-(66+176-126)=132-116=16 =139-0+101-121-16=103 FCF=NI+Depreciation-CAPEX+ΔLT Debt-ΔWC ΔLT Debt=LT Debt(2015)-LT Debt (2014)=167-151=16 =139+101-121+16-16=119

Q4) OFCF? FCF?

OFCF=EBIT-Tax+Depreciation-CAPEX-ΔWC CAPEX=ΔLT Assets: 2290-2264=26 +311=337 (Since everything is NET… In other words, Depreciation is taking care of, I have to add back depreciation) ΔWC=WC(2015)-WC(2014)=(1239+503+418-686)-(1187+227+522-613) =1474-1323=151 =634-162+311-337-151=295 FCF=NI+Depreciation-CAPEX+ΔLT Debt-ΔWC ΔLT Debt=LT Debt(2015)-LT Debt (2014)=1300-1350=-50 =302+311-337+(-50)-151=75