1, Problem 2:

Sales
Costs
Depr:
Interest Exp
Earnings Before Taxes
Taxes (35%)
Net Income

$734,000
$315,000
$48,000
$35,000
$336,000
$117,600
$218,400

2, Problem 3:
Dividends
Retained Earnings

$85,000
$133,400

3, Problem 4:
EPS = Net Income / # of shares
= $218,400 / 110,000
= $1.985
Dividends per share = Dividends / # of shares
= $85,000 / 110,000 = $0.77
4, Problem 6:
$50,000 x 15% = $7,500
$25,000 x 25% = $6,250
$25,000 x 34% = $8,500
$155,000 x 39% = $60,450
2011 Income Taxes = $82,700
5, Problem 7:
- Average Tax Rate: $82,700 / $255,000 = 32.43%
- Marginal Tax Rate: 39%
6, Problem 11:
Interest Paid
Net New Borrowing Long-term
Cash Flow to Creditors

$190,000
$250,000
($60,000)

7, Problem 12:
Dividends
Net New Equity raised
Cash Flow to Shareholders

$540,000
435,000
$105,000

8, Problem 13:

Cash Flow to Creditors

Cash Flow to Shareholders
Cash Flow from Assets
Cash Flow from Assets
Net Capital Spending
Change in Net Working Capital
Operating Cash Flow
9, Problem 14:
a, 2011 Operating Cash Flow
Sales
Costs
Other Expenses
Depreciation Expense
Earnings Before Interest and Taxes (EBIT)
Depreciation Expense
Taxes
Operating Cash Flow

($60,000)
$105,000
$45,000
$45,000
$1,300,000
($55,000)
$1,290,000

$235,000
$141,000
$7,900
$17,300
$68,800
$17,300
$19,565

$66,535

b, 2011 Cash Flow To Creditors

Interest Paid
Net New Borrowing Long-term
Cash Flow To Creditors

$12,900
($4,500)
$17,400

c, 2011 Cash Flow To Stockholders

Dividends
Net New Equity Raised
Cash Flow To Stockholders

$12,300
$6,100
$6,200

10, Problem 21:

a, 2011 Net Income
Sales
Cost of goods sold
Depreciation Expense
Earnings Before Interest and Taxes (EBIT)
Interest Expense
Earnings Before Taxes (EBT)
Taxes (34%)
Net Income

$27,360
$19,260
$4,860
$3,240
$2,190
$1,050
$357
$693

b, 2011 Operating Cash Flow

Earnings Before Interest and Taxes (EBIT)

$3,240

Depreciation Expense
Taxes (34%)
Operating Cash Flow
c, 2011 Cash Flow From Assets
Ending net fixed assets
Beginning net fixed assets
Depreciation
Net capital spending

$4,860
$357
$7,743

$20,160
$16,380
$4,860
$8,640

Ending Current Assets

Ending Current Liabilities
Ending NWC

$7,116
$3,780
$3,336

Beginning Current Assets

Beginning Current Liabilities
Beginning NWC

$5,760
$3,240
$2,520

Ending NWC
Beginning NWC
Change in NWC

$3,336
$2,520
$816

Operating cash flow

Net capital spending
Change in net working capital (NWC)
Cash Flow From Assets

$7,743
$8,640
$816
($1,713)

The cash flow from assets can be positive or negative, since it represents
whether the firm raised funds or distributed funds on a net basis.
In this problem, even though the Operating Cash Flow is positive,
the firm invested heavily in both fixed assets and net working capital
it had to raise a net $1,713 in funds from its stockholders and creditors
to make these investments.
11, Problem 22:
a,
2010 Total Assets (Current + Fixed)
2010 Total Liabilities (Current + Long-term)
2010 Owners' Equity

$4,681
$2,356
$2,325

2011 Total Assets (Current + Fixed)

2011 Total Liabilities (Current + Long-term)
2011 Owners' Equity

$5,526
$2,527
$2,999

b,
Ending Current Assets
Ending Current Liabilities
Ending NWC

$990
$410
$580

Beginning Current Assets

Beginning Current Liabilities
Beginning NWC

$914
$365
$549

Ending NWC
Beginning NWC
Change in NWC

$580
$549
$31

12, Problem 25:

Income Statement
Net sales
Cost of goods sold
Gross profit
Other expenses
Depreciation
Earnings before interest and taxes (EBIT)
Interest
Earnings before taxes (EBT)
Taxes (34%)
Net income

2010
11,573
3,979
7,594
946
1,661
4,987
776
4,211
1432
2,779

2011
12,936
4,707
8,229
824
1,736
5,669
926
4,743
1613
3,130

2010
6,067
8,034
14,283
28,384

2011
6,466
9,427
15,288
31,181

Net Fixed Assets

50,888

54,273

Total Assets

79,272

85454

4,384
1,171
5,555

4,644
1,147
5,791

Balance Sheet
Assets
Cash
Accounts receivable
Inventories
Total Current Assets

Liabilities and Equity

Accounts payable
Short-term notes payable
Total Current Liabilities

Long-term bonds
Total Liabilities
Common stock
Retained earnings
Owner' equity
Total Liabilities and Equity

20,320
25875

24,696
30487

52,029
1,368
53,397
79,272

53,455
1,512
54967
85454