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89.
The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2
million, and the 2011 balance sheet showed net fixed assets of $2.6 million.
The company's income statement showed a depreciation expense of
$900,000. What was the amount of the net capital spending for 2011?
90.
The 2010 balance sheet of Global Tours showed current assets of $1,360
and current liabilities of $940. The 2011 balance sheet showed current
assets of $1,640 and current liabilities of $1,140. What was the change in
net working capital for 2011?
91.
The 2010 balance sheet of The Beach Shoppe showed long-term debt of
$2.1 million, and the 2011 balance sheet showed long-term debt of $2.3
million. The 2011 income statement showed an interest expense of
$250,000. What was the cash flow to creditors for 2011?
92.
The 2010 balance sheet of The Sports Store showed $800,000 in the
common stock account and $6.7 million in the additional paid-in surplus
account. The 2011 balance sheet showed $872,000 and $8 million in the
same two accounts, respectively. The company paid out $600,000 in cash
dividends during 2011. What is the cash flow to stockholders for 2011?
93.
Suppose you are given the following information for Bayside Bakery: sales =
$30,000; costs = $15,000; addition to retained earnings = $4,221; dividends
paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the
amount of the depreciation expense?
94.
Dee Dee's Marina is obligated to pay its creditors $6,400 today. The firm's
assets have a current market value of $5,900. What is the current market
value of the shareholders' equity?
95.
During 2011, RIT Corp. had sales of $565,600. Costs of goods sold,
administrative and selling expenses, and depreciation expenses were
$476,000, $58,800, and $58,800, respectively. In addition, the company had
an interest expense of $112,000 and a tax rate of 32 percent. What is the
operating cash flow for 2009? Ignore any tax loss carry-back or carry-
forward provisions.
Essay Questions
96.
Assume you are the financial officer of a major firm. The president of the
firm has just stated that she wishes to reduce the firm's investment in
current assets since those assets provide little, if any, return to the firm.
How would you respond to this statement?
97.
As long as a firm maintains a positive cash balance, why is it essential to
review the firm's cash flows?
98.
The managers of a firm wish to expand the firm's operations and are trying
to determine the amount of debt financing the firm should obtain versus the
amount of equity financing that should be raised. The managers have asked
you to explain the effects that both of these forms of financing would have
on the cash flows of the firm. Write a short response to this request.
99.
Discuss the difference between book values and market values and explain
which one is more important to the financial manager and why.
100.
Assume you are a credit manager in charge of approving commercial loans
to business firms. Identify three aspects of a firm's cash flows you would
review and explain the type of information you hope to gain from reviewing
each of those five aspects.
