1. Maddux, Inc.
, has completed its fiscal year and reported the following
information. The company had current assets of $153,413, net fixed
assets of $ 412,331, and other assets of $7,822. The firm also has
current liabilities worth $65,314, long-term debt of $178,334, and
common stock of $162,000. How much retained earnings does the
firm have?
Total Assets = Total Liabilities + Stockholders’ Equity
Total Assets = Current Assets + Net Fixed Assets + Other Assets =
573,566
Total Liabilities = current liabilities + long-term debt = 243,648
=> Stockholders’ Equity = total assets – total liabilities = 329,918
Stockholders’ Equity = Common stock + Retained earnings
=> RETAINED EARNINGS = Stockholders Equity – Common stock =
167,918
2. Galan Associates prepared its financial statement for 2008 based on
the information given here. The company had cash worth $1,234,
inventory worth $13,480, and accounts receivables of $7,789. The
company's net fixed assets are $42,331, and other assets are $1,822.
It had accounts payables of $9,558, notes payables of $2,756, common
stock of $22,000, and retained earnings of $14,008. How much long-
term debt does the firm have?
Total asset =
Total liabilities =
Stockholders equity = Common Stock + Retained Earnings
Long-Term Debt = Total Assets − Total Current Liabilities −
Stockholders’ Equity
3. Tumbling Haven, a gymnastic equipment manufacturer, provided the
following information to its accountants. The company had current
assets of $145,332, net fixed assets of $356,190, and other assets of
$4,176. The firm has long-term debt of $76,445, common stock of
$200,000, and retained earnings of $134,461. What amount of current
liabilities does this firm have?
Total Assets = Current Assets + Net Fixed Assets +
Other AssetsTotal Assets
= 145,332 + 356,190 + 4,176 = 505,698
Total Equity = Common Stock + Retained Earnings
=200,000 + 134,461 = 334,461
Total Liabilities = Total Assets−Total Equity
= 505,698−334,461
= 171,237
Current Liabilities = Total Liabilities −Long-term Debt
Current Liabilities = 171,237−76,445 = 94,792
4. Chandler Sporting Goods produces baseball and football equipment
and lines of clothing. This year the company had cash and marketable
securities worth $335,485, accounts payables worth $1,159,357,
inventory of $1,651,599, accounts receivables of $1,488,121, short-
term notes payable worth $313,663, and other current assets of
$121,427. What is the company's net working capital?
Net Working Capital=Current Assets−Current Liabilities
5. Spartan, Inc., is a manufacturer of automobile parts located in
Greenville, South Carolina. At the end of the current fiscal year, the
company had net working capital of $157,903. The company showed
accounts payables of $94,233, accounts receivables of $83,112,
inventory of $171,284, and cash and marketable securities of $12,311.
What amount of notes payables does the firm have?
Net Working Capital = Current Assets − Current Liabilities
Current Assets =
Accounts Receivable+Inventory+Cash and Marketable Securities
= 266,707
Net Working Capital = 157,903
Net Working Capital = Current Assets − Current Liabilities
157,903 = 266,707 − Current Liabilities
=> Current Liabilities = 108,804
Current Liabilities = Accounts Payable + Notes Payable
108,804 = 94,233 + Notes Payable => NP
6. Triumph Trading Company provided the following information to its
auditors. For the year ended March 31, 2008, the company had
revenues of $1,122,878, operating expenses (excluding depreciation
and leasing expenses) of $612,663, depreciation expenses of
$231,415, leasing expenses of $126,193, and interest expenses
equal to $87,125. If the company's tax rate was average 34 percent,
what is its net income after taxes?
Revenues = $1,122,878
Operating Expenses (excluding depreciation and leasing) =
$612,663
Depreciation Expenses = $231,415
Leasing Expenses = $126,193
Interest Expenses = $87,125
Tax Rate = 34%
EBIT = Revenues − Operating Expenses − Depreciation Expenses −
Leasing Expenses
= 1,122,878 − 612,663 − 231,415 − 126,193 = 152,607
EBT = EBIT – Interest Expenses
= 152,607 − 87,125 = 65,482
Tax = EBT × TaxRate = 65,482 × 0.34 = 22,264
NetIncome = EBT−Tax = 65,482−22,264 = 43,218
7. Parrino Corporation has announced that its net income for the year
ended June 30, 2008, is $1,824,214 (NET INCOME). The company had
an EBITDA of $ 5,174,366, and its depreciation and amortization
expense was equal to $1,241,790. The company's average tax rate is
34 percent. What is the amount of interest expense for the firm?
EBIT = EBITDA − Depreciation&Amortization
EBIT = 5,174,366−1,241,790 = 3,932, 576
EBT = EBIT – INTEREST EXPENSE
2,763,051 = 3,932,576 – X => X =
NET INCOME = EBT – TAX
1,824,214 = EBT – (EBT x TAX RATE)
1,824,214 = EBT – (0,34EBT)
1,824,214 = 0,66 EBT
=> EBT = 1,824,214/0.66 = 2,763,051
8. Trident Manufacturing Company's treasurer identified the following
cash flows during this year as significant. It had repaid existing debt to
the tune of $425,110, while raising additional debt capital of $750,000.
It also repurchased stock in the open markets for a total of $63,250. It
paid $233,144 in dividends to its shareholders. What is the net cash
provided (used) by financing activities?
NetCash=Inflow from debt raised−(Outflows for debt repaid+St
ock repurchase+Dividends paid)
Net Cash = 750,000 − (425,110+63,250+233,144)
NetCash = 750,000−721,504 = 28,496
9. Zidane Enterprises has a current ratio of 1.92, current liabilities of
$272,934, and inventory of 197,333. What is the firm's quick ratio
Quick Ratio = (Current Assets−Inventory) : Current Liabilities
current ratio = current assets : current liabilities
=> current assets =
10. Ellicott City Manufacturers, Inc., has sales of $6,344,210, and a
gross profit margin of 67.3 percent. What is the firm's cost of goods
sold?
Gross Profit Margin = Gross Profit/Sales
=> GP = GPM x Sales = 4,268,202
COGS = Sales − Gross Profit
= 6,344,210 − 4,268,202.23 = 2,076,007.77
11. Perez Electronics Corp. has reported that its net income for 2006
is $1,276,351. The firm has 420,000 shares outstanding and a P-E ratio
of 11.2 times. What is the firm's share price?
P-E Ratio = Share Price/ Earnings per Share (EPS)
=> Share Price = P-E Ratio × Earnings per Share (EPS)
EPS = NET ICOME/ SHARE OUTSTANDING
12. Juventus Corp has total assets of $4,744,288, total debt of
$2,912,000, and net sales of $7,212,465. Their net profit margin for
the year is 18 percent. What is Juventus's ROA?
Net Income=Net Sales×Net Profit Margin
Net Income=7,212,465×0.18=1,298,243.70
ROA = (NET ICOME/TOTAL ASSETS) x100
ROA =(1,298,243.70/ 4,744,288 1)× 100
=0.2737×100=27.37%
13. Andrade Corp has debt of $2,834,950, total assets of $5,178,235,
sales of $8,234,121, and net income of $812,355. What is the firm's
return on equity?
Shareholders’ Equity = Total Assets − Total Debt
ROE = (NET ICOME / SHAREHOLDER’S EQUITY) x 100
