Build Bring University

Corporate Finance I
Individual Assignment
1. Mina Food Co., given the following information: sales = $34,000; costs = $16,000; addition to retained
earnings = $4,300; dividends paid = $1,200; interest expense =$2,300; tax rate = 35 percent.
calculate the depreciation expense.
2. Based on the following information: cash = $210,000; patents and copyrights = $720,000; accounts payable
= $430,000; accounts receivable = $149,000; tangible net fixed assets = $2,900,000; inventory =$265,000;
notes payable = $180,000; accumulated retained earnings = $1,865,000; long-term debt = $1,430,000.
Prepare a balance sheet for Tim’s Couch Corp. asof December 31, 2007
3. During 2007, Raines Corp. had sales of $840,000. Cost of goods sold, administrative and selling expenses,
and depreciation expenses were $625,000, $120,000, and $130,000, respectively. In addition, the company
had an interest expense of $85,000 and a tax rate of35 percent. (Ignore any tax loss carry-back or carry-
forward provisions.)
3.1. What is Raines’s net income for 2007?
3.2. What is its operating cash flow?
3.3. If Raines paid out $30,000 in cash dividends. Is this possible? If no new investmentswere made in net
fixed assets or net working capital, and if no new stock was issued during the year, what do you know
about the firm’s long-term debt account?
nings expected in 2009.
4. Use the following information for Dragon Tale, Inc., (assume the tax rate is 34 percent):

2006 2007
Sales $4,822 $5,390
Depreciation 692 723
Cost of goods sold 1,658 1,961
Other expenses 394 343
Interest 323 386
Cash 2,528 2,694
Accounts receivable 3,347 3,928
Notes payable 488 478
Long-term debt 8,467 10,290
Net fixed assets 21,203 22,614
Accounts payable 2,656 2,683
Inventory 5,951 6,370
Dividends 588 674

4.1. Draw up an income statement and balance sheet for this company for 2006 and 2007.
4.2. For 2007, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders.

5. Use the balance sheet and income statement below to construct a statement of cash flows for Cam Pets. Ltd.

Cam Pets Ltd.

Balance Sheet as of December 31, 2007 and 2008
(in millions of dollars)
2007 2008 2007 2008
Assets Liabilities & Equity

Current assets: Current liabilities :

Cash and marketable Accrued wages and
securities $ 5 $ 5 taxes $ 6 $ 10
Accounts receivable 19 20 Accounts payable 15 16
Inventory 29 36 Notes payable 13 14
Total $ 53 $ 61 Total $ 34 $ 40

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Fixed assets: Long-term debt: $ 53 $ 57
Gross plant and
equipment $ 88 $106 Stockholders’ equity:
Less: Depreciation 11 15 Preferred stock (2 million shares) $ 2 $ 2
Net plant and Common stock and
equipment $ 77 $ 91 paid-in surplus
Other long-term (5 million shares) 11 11
assets 15 15 Retained earnings 45 57
Total $ 92 $106 Total $ 58 $ 70

Total assets $145 $167 Total liabilities and equity $145 $167

Cam Pets Ltd.

Income Statement for Years Ending December 31, 2007 and 2008
(in millions of dollars)
2007 2008
Net sales $ 80 $ 76
Less: Cost of goods sold 39 44
Gross profits 41 32
Less: Depreciation 4 4
Earnings before interest and taxes (EBIT) 37 28
Less: Interest 5 5
Earnings before taxes (EBT) 32 23
Less: Taxes 10 7
Net income $22 $16
Less: Preferred stock dividends $ 1 $ 1
Net income available to common stockholders $21 $15
Less: Common stock dividends $ 3 $ 3
Addition to retained earnings $18 $12
Per (common) share data:
Earnings per share (EPS) $4.20 $3.00
Dividends per share (DPS) $0.60 $0.60
Book value per share (BV) $11.20 $13.60
Market value (price) per share (MV) $14.60 $14.25

6. Complete the following balance sheet for the Land River Company using the following information:
• Debt to Assets = 60 percent
• Quick Ratio = 1.1
• Asset Turnover = 5x
• Fixed Asset Turnover = 12.037x
• Current Ratio = 2
• Average Collection Period = 16.837 days
• Assume all sales are on credit and a 360-day year.

7. Reading store, the only bookstore close to campus, had net income in 2015 of $90,000. Here are some of
the financial ratios from the annual report.
Profit margin = 12% Return on Assets= 20% Debt to Asset Ratio = 55%
Using these ratios, calculate:
a) Sales b) Total assets c) Total asset turnover
d) Total debt e) Stockholders' equity f) Return on equity

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8. Taylor Nix, the founder of SunMoon Boards company Located in Phnom Penh. Taylor's expansion plans
opening another surfboard store in Koh Kong and require a significant investment, Taylor has previously
prepared information as table below. At the urging of his investors, Taylor has hired financial analyst Ratha
to evaluate the performance of the company over the past year. SunMoon Boards currently pays out 50
percent of net income as dividends to Taylor and the other original investors, and has a 20 percent tax rate.
You are Ratha's assistant, and she has asked you to prepare and answer the following:
8.1. An income statement for 2007 and 2008.
8.2. Statement of Retained earnings for 2007 and 200
8.3. A balance sheet for 2007 and 2008
8.4. Operating cash flow for 2007 and 2008
8.5. Cash flow from assets for 2008.
8.6. Cash flow to creditors for 2008.
8.7. Cash flow to stockholders for 2008.
8.8. What do you think about Taylor's expansion plans?

2007 2008

Cost of goods sold $96,952 $122,418

Cash $13,990 $21,137

Depreciation $27,370 $30,936

Interest expense $5,950 $6,820

Selling and Administrative expenses $19,067 $24,886

Accounts payable $24,725 $28,003

Fixed assets $120,750 $147,115

Sales $190,199 $231,840

Accounts receivable $9,913 $12,859

Notes payable $11,270 $12,305

Long-term debt $60,950 $70,150

Inventory $20,861 $28,628

New equity 0 $12,000

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