ulFM 2 FINANCIAL ANALYSIS AND REPORTING

First Semester, AY 2019-2020

Midterm, Assignment No. 2

Name:____________________________________ Score ___________________/25

Course / Year: BSBA FM-III Section __________ Date: ______________________

Finding the operating and free cash flows. Consider the balance sheets and selected data from the
Income statement of J. B Chavez Corporation that appear below.

J. B Chavez Corporation Balance Sheets, ‘000

December 31
2014 2015
Assets
Cash $ 225 $ 175
Accounts receivable 450 430
Inventories 575 625
Total current assets $ 1,250 $ 1,230
Gross fixed assets $ 2,200 $ 2,500
Less: Accumulated depreciation 1,000 1,200
Net fixed assets $ 1, 200 $ 1, 300
Total assets $ 2,450 $ 2,530
Liabilities and Stock Equity
Accounts payable $ 250 $ 115
Notes Payable 0 115
Total Current Liabilities $ 250 $ 230
Long- term Bonds 600 600
Total Liabilities $ 850 $ 830
Common stock $ 300 $ 300
Paid-in capital 600 600
Retained earnings 700 800
Total stockholders’ equity $ 1,600 $ 1,700
Total liabilities and stockholders’ equity $ 2,450 $ 2,530

J. B Chavez Corporation Income Statement Data (2015), ‘000

Depreciation expense $ 200
Earnings before interest and taxes (EBIT) 330
Interest expense 60
Net profits after taxes 162
Tax rate 30%

J. B Chavez Corporation 2015, ‘000

12pts GET THE: Solution ANSWER
A NOPAT
(2pts)

B OCF
(2pts)

C NFAI
(2pts)

D NCAI
(2pts)
E FCF
(2pts)
Try to give a brief interpretation on FCF

Name:____________________________________
Prepare a Statement of Cash Flows for J. B Chavez Corporation using the given template. 13pts

______________________
______________________
_____________________
______________

Operating Activities:
Net profits after taxes P 162
Depreciation expense 200
Decrease in accounts receivable 20
Increase in Inventories (50)
Decrease in accounts payable (135)

_____________
Cash provided by operating activities Php 197

Investing Activities:
Increase in gross fixed assets P (300)
Changes in equity investment in other firm
Cash provided by investing activities Php(300)

Financing activities:
Increase in notes payable P 115
Increase in Long-term debts.
Changes in stockholders’ equity
Dividends Paid (62)
Cash provided by financing activities Php 53
NET Decrease in CASH Php -50

Note: Find the dividends paid by Keith to its stockholders to bring the statement of cash flow into BALANCE.