Financial Analysis Problems and Solutions
Solve various financial problems related to balance sheets, income statements, cash flow, and equity accounts. Calculate net income, operating cash flow, net working capital, and more for different companies as per the provided financial data.
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Class Problems Chapter 2 1. Bear Tracks, Inc., has current assets of $2,230, net fixed assets of $9,900, current liabilities of $1,380, and long-term debt of $4,040. What is the value of the shareholders equity account for this firm? How much is the company's net working capital? 1
Class Problems Chapter 2 2. Pharrell, Inc., has sales of $598,000, costs of $260,000, depreciation expense of $64,500, interest expense of $31,500, and a tax rate of 40 percent. What is the net income for this firm? 3. Hailey, Inc., has sales of $19,600, costs of $9,430, depreciation expense of $2,100, and interest expense of $1,590. Assume the tax rate is 35 percent. What is the operating cash flow, or OCF? 2
Class Problems Chapter 2 4. Rotweiler Obedience School s December 31, 2015, balance sheet showed net fixed assets of $1,760,000, and the December 31, 2016, balance sheet showed net fixed assets of $2,110,000. The company s 2016 income statement showed a depreciation expense of $328,000. What was the company's net capital spending for 2016? 5. The December 31, 2015, balance sheet of Maria s Tennis Shop, Inc., showed current assets of $1,165 and current liabilities of $945. The December 31, 2016, balance sheet showed current assets of $1,380 and current liabilities of $1,055. What was the company's 2016 change in net working capital, or NWC? 3
Class Problems Chapter 2 6. Weiland Co. shows the following information on its 2016 income statement: sales = $160,000; costs = $80,500; other expenses = $3,800; depreciation expense = $9,500; interest expense = $7,000; taxes = $20,720; dividends = $7,900. In addition, you're told that the firm issued $4,000 in new equity during 2016 and redeemed $6,700 in outstanding long-term debt. a. What is the 2016 operating cash flow? b. What is the 2016 cash flow to creditors? c. What is the 2016 cash flow to stockholders? d. If net fixed assets increased by $20,950 during the year, what was the addition to NWC? 4
