33:010:325 Lecture Notes - Lecture 5: Promissory Note, Retained Earnings, United States Treasury Security

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13 Oct 2017

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6: statement of financial position & cash flows. Classi ed bs = uses classi cations to determine various classes of assets & liabilities according to nature, function, size current v. non-current. Assets: current assets = shown rst on bs; resource that you expect to convert to cash w/i one year. Cash & cash equivalents (commercial paper, money market funds, us treasury bills short term) Inventory (tangible property that company buys with intention to sell; an asset. Tuesday, september 26, 2017 that later turns into expense cogs) Prepaid expenses (you expense over time: noncurrent assets: take more than 1 year to convert into cash. Long-term investments: non-current assets not directly used in ops of bus. Liabilities: current liabilities: obligations intended to pay within 1 year. Accounts payable generally have no interest; generated by normal business ops. Short-term notes payable generally carries interest; usually has collateral. Accrued liabilities expenses incurred that remain unpaid @ end of pd.

Related Questions

I know it's a lot but they are all small questions related to the same case so I didn't know how to split it into multiple questions. I would really appreciate the help, as I need a way to compare my answers.

Dallas & Associates Financial Statement Preparation & Analysis

You have been hired as a senior financial analyst for Dallas and Associates and you are in charge of preparing the financial statements and presenting an annual analysis at the board meeting.

Overview of Dallas & Associateâs Balance Sheet

The assets of Dallas & Associates in 2017 have both current assets and net plant and equipment. It has total assets of $ 7.5 million and net plan and equipment equals $5 million. Dallas & Associateâs only finances with $2.5 million long-term debt, $500,000 notes payable and total common equity of $3.5 million. The firm does have $400,000 accounts payable and $600,000 accruals on its balance sheet. Now assume the firmâs current assets consist entirely of cash and cash equivalence, account receivables and inventories. If it has 1.5 million cash and cash equivalents and $400,000 account receivables.

Dallas & Associates Income Statement in 2017 (dollars are in millions)

Sales	15
Operating costs excluding depreciation and amortization	5
EBITDA	10
Depreciation & Amortization	0.6
EBIT	9.4
Interest	0.4
EBT	9
Taxes (40%)	3.6
Net Income Cash Dividends	5.4 2.0

Use the above information to answer the following questions. Make sure to include the calculation steps/ formula.

Questions:

a. Prepare the balance sheet.


Total Assets	Liabilities & Shareholderâs Equity

b. What is the amount of total liabilities and equity that appears on the firmâs balance?

c. What is the amount of current assets?

d. What is the balance of current liabilities?

e. What is the amount of companyâs inventory?

f. What is the amount of total liabilities?

g. What is the amount of total debt?

h. What is the amount of total capital?

i. What is the amount of net working capital?

j. What is the amount of net operating working capital?

k. If by the end of 2017, the retained earnings of John and Jon is $2.5 million, what is the amount of paid-in capital?

l. If John & Jon decides to purchase $500,000 market securities by using its cash, how does this action would affect its current asset position?

m. As the Income of Statement shows in 2017 John & Jon actually gave out $2 million cash dividends, what is the amount of retained earnings?

n. What is the amount of operating income?

o. What are the operating margin and the profit margin?

p. What is the average length of time that John & Jon must wait after making a sale before it receives cash?

q. What is the ratio we generally use to estimate a firmâs ability to meet its annual interest payments? And calculate that ratio for John and Jon.

r. What are the fixed assets turnover ratio and the total asset turnover ratio?

s. What is the ratio of total debt to total capital?

t. What is the ratio of return on common equity?

u. Assume between 2016 and 2017, net operating working capital has increased by $500,000, calculate John & Jonâs free cash flow. (Hint: use this formula. FCF = [EBIT (1-T) +Depreciation & Amortization] â [Capital Expenditures + Change on Net Operating Working Capital])

v. Now after you present your analysis on the meeting, the CEO would like to see higher sales and a forecasted net income of $10.8 million. Assume that operating costs (excluding depreciation and amortization) are still one third of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate which is 40%, will remain the same. What level of sales would generate $10.8 million in net income?

THANK YOU!

I need Answers to Question from P - V!

Dallas & Associates Financial Statement Preparation & Analysis

You have been hired as a senior financial analyst for Dallas and Associates and you are in charge of preparing the financial statements and presenting an annual analysis at the board meeting.

Overview of Dallas & Associateâs Balance Sheet

Dallas & Associates Income Statement in 2017 (dollars are in millions)

Sales	15
Operating costs excluding depreciation and amortization	5
EBITDA	10
Depreciation & Amortization	0.6
EBIT	9.4
Interest	0.4
EBT	9
Taxes (40%)	3.6
Net Income Cash Dividends	5.4 2.0

Use the above information to answer the following questions. Make sure to include the calculation steps/ formula.

Questions:

a. Prepare the balance sheet.


Total Assets	Liabilities & Shareholderâs Equity

b. What is the amount of total liabilities and equity that appears on the firmâs balance?

c. What is the amount of current assets?

d. What is the balance of current liabilities?

e. What is the amount of companyâs inventory?

f. What is the amount of total liabilities?

g. What is the amount of total debt?

h. What is the amount of total capital?

i. What is the amount of net working capital?

j. What is the amount of net operating working capital?

k. If by the end of 2017, the retained earnings of John and Jon is $2.5 million, what is the amount of paid-in capital?

l. If John & Jon decides to purchase $500,000 market securities by using its cash, how does this action would affect its current asset position?

m. As the Income of Statement shows in 2017 Dallas associates actually gave out $2 million cash dividends, what is the amount of retained earnings?

n. What is the amount of operating income?

o. What are the operating margin and the profit margin?

p. What is the average length of time that Dallas associates must wait after making a sale before it receives cash?

q. What is the ratio we generally use to estimate a firmâs ability to meet its annual interest payments? And calculate that ratio for Dallas associates.

r. What are the fixed assets turnover ratio and the total asset turnover ratio?

s. What is the ratio of total debt to total capital?

t. What is the ratio of return on common equity?

u. Assume between 2016 and 2017, net operating working capital has increased by $500,000, calculate Dallas & Associates free cash flow. (Hint: use this formula. FCF = [EBIT (1-T) +Depreciation & Amortization] â [Capital Expenditures + Change on Net Operating Working Capital])

THANK YOU!

plumelk953

For this assignment you will create a financial business plan thatwill tie together an income statement, a purchases budget, a cashbudget, and a pro forma balance sheet. The completed assignmentshould be printed on two pages. You must also turn in a âhardâ copyof your report.

The first step is to produce the income statement.

Income Statement
To complete this first step, we need to project monthly sales andexpenses. This requires estimates of monthly sales volume, sellingprice, and cost behaviors. The following are the estimates youshould use in developing your model.

Annual sales: 18,000 pizzas

Monthly sales pattern:

January 8% April 10.5% July 4% October 10.5%
February 10% May 7% August 6% November 9%
March 11% June 6% September 9.5% December 8.5%

Selling Price: $11.50 per pizza

Annual cost behaviors:
Fixed Variable (per pizza)
Ingredients $ 0 $3.00
Salaries & wages 48,000 .50
Advertising 3,000 .00
Depreciation 9,000 .00
Utilities 3,000 .25
Supplies 0 .15
Local taxes 4,200 .00
Insurance 2,400 .00
Miscellaneous 2,400 .10

The above fixed expenses are for the entire year. Assume fixedexpenses are incurred evenly throughout the year.

Your assignment is to produce a computer spreadsheet that willgenerate monthly income statements for the entire year. Thespreadsheet should allow for easy manipulation of annual volume,selling price, and changes in cost behavior.

Purchases budget, balance sheet, and cash budget
After completing the projected income statement, you are now ableto prepare the purchases budget, cash budget, and balance sheet.The purchasing budget is used to plan raw material (ingredient)purchases. The purpose of the cash budget is to predict our cashposition at the end of each period, thus allowing us to planshort-term borrowing if it is needed. We create the cash budget bydetermining the amount and timing of cash receipts and cashpayments. To do this, we make certain assumptions about expectedcash flow patterns. The following assumptions apply to the PizzaShoppe:

1. Revenues are collected in the month of sale.
2. Ingredients purchased are paid as follows:
â¢ Forty percent in the month of purchase.
â¢ Sixty percent in the month following the purchase.
3. Our policy is to have enough ingredients on hand at the end ofeach month to satisfy 20% of the next monthâs cost ofingredients.
4. Salaries and wages are paid as follows:
â¢ Seventy-five percent in the month incurred.
â¢ Twenty-five percent in the following month.
5. Advertising is paid in the month incurred.
6. Utilities are paid in the month after itâs incurred.
7. Supplies are purchased and paid in the month before use.
8. Insurance is paid 50% in January and 50% in July.
9. The local taxes are paid 50% in April and 50% in October.
10. All miscellaneous expenses are paid in the month after they areincurred.
11. The long-term loan carries a 12% interest rate.
12. The owner withdraws $3,000 per month.

In addition to the amount and timing of cash flows, we need to knowwhat our initial financial position is. Financial position iscaptured by the balance sheet. The balance sheet is a listing ofour resources (assets), our obligations (liabilities), and the networth of the business (ownerâs equity). The balance sheet for thePizza Shoppe on January 1, just after we purchase it, is asfollows:

ASSETS LIABILITIES
Cash $ 100 Accounts Payable $ 0
Ingredients inventory 700 Salaries & Wages Payable 0
Supplies inventory 216 Utilities payable 500
Prepaid taxes 0 Taxes payable 0
Prepaid insurance 0 Misc. expenses payable 0
Equipment & fixtures 30,000 Short-term bank loan 0
Less: Accumulated deprec. 0 Long-term bank loan 90,000
Building 60,000 Total Liabilities $ 90,500
Less: Accumulated deprec. 0
Land 29,500 OWNERS EQUITY $ 30,016
Total Assets $120,516
TOTAL LIABILITIES & O.E. $120,516

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33:010:325 Lecture Notes - Lecture 5: Promissory Note, Retained Earnings, United States Treasury Security

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