Fi 320 Hw 2

Chapter 2 HOMEWORK ASSIGNMENTS #1. Billy’s Exterminators, Inc., has sales of $643,000, costs of $280,000, depreciation expense of $32,000, interest expense of $26,000, and a tax rate of 35 percent. What is the net income for this firm? | |
PROVIDE SOLUTION HERE: The income statement for the company is: | Income Statement | Sales | $643,000 | | Costs | $280,000 | | Depreciation | $32,000 | | | | | EBIT | $331,000 | | Interest | $26,000 | | | | | EBT | $305,000 | | Taxes (35%) | $106,750 | | | | | Net income | $198,250 | |

Hence Net income is….________$198,250___________

#2. Given the following information, what is the cash flow to creditors for 2011? | 2010 | 2011 | Sales | 5831 | 6423 | COGS | 3670 | 4109 | Interest | 291 | 280 | Depreciation | 125 | 122 | Cash | 250 | 313 | Accounts receivables | 1092 | 1162 | Current liabilities | 717 | 1051 | Inventory | 1495 | 1521 | Long-term debt | 2400 | 1100 | Net fixed assets | 4006 | 4123 | Common Stock | 1900 | 2100 | Taxes | 590 | 670 |

PROVIDE SOLUTION HERE: CF to creditors = interest paid – net new long term borrowing
CF to creditors = 280 – ( -1300) = $1580

#3. Given below is financial information for Fowler’s Flower Shop. Fowler’s Flower Shop Income Statement
For the Years Ended December 31, 2010 and 2011. | 2011 | 2010 | Sales | $3,550,000 | $3,340,000 | Cost of Goods Sold | 1,750,000 | 1,662,000 | Other Expenses | 276,500 | 220,000 | Depreciation | 80,000 | 66,000 | EBIT | $1,443,500 | $1,392,000 | Interest Expense | 243,000 | 306,500 | EBT | $1,200,500 | $1,085,500 | Taxes (35%) | 420,175 | 379,925 | Net Income | $780,325 | $705,575 | | | | Dividends | $108,000 | $74,000 |

Fowler’s Flower Shop
Balance Sheet
December 31, 2010 & December 31, 2011 Assets | 2011 | 2010 | Liabilities & S.E. | 2011 | 2010 | Current Assets | | | Current Liabilities | | | Cash |