# Financial statements, cash flow, and taxes: spreadsheet problems

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Financial Statements, Cash Flow, and Taxes: Spreadsheet Problems

(2-14) Build a Model: Free Cash Flows, EVA, and MVA
Begin with the partial model in the file Ch02 P14 Build a Model.xls on the textbook’s Web site.

Financial Statements, Cash Flow, and Taxes: Spreadsheet Problems

a. Cumberland Industries’s 2010 sales were \$455,000,000; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were \$67,000,000; depreciation amounted to 10% of net fixed assets; interest expenses were \$8,550,000; the state-plus-federal corporate tax rate was 40%; and Cumberland paid 25% of its net income out in dividends. Given this information, construct Cumberland’s 2010 income statement. Also calculate total dividends and the addition to retained earnings. ( Hint: Start with the partial model in the file and report all dollar figures in thousands to reduce clutter.)

b. Cumberland Industries’s partial balance sheets are shown below. Cumberland issued \$10,000,000 of new common stock in 2010. Using this information and the results from part a, fill in the missing values for common stock, retained earnings, total common equity, and total liabilities and equity.

Cumberland Industries: Balance Sheets as of December 31 (Thousands of Dollars)
2010 2009

Assets
Cash \$ 91,450 \$ 74,625
Short-term investments 11,400 15,100
Accounts receivable 108,470 85,527
Inventories 38,450 34,982
Total current assets \$249,770 \$210,234
Net fixed assets 67,000 42,436
Total assets \$316,770 \$252,670
Liabilities and Equity
Accounts payable \$ 30,761 \$ 23,109
Accruals 30,405 22,656
Notes payable 12,717 14,217
Total current liabilities \$ 73,883 \$ 59,982
Long-term debt 80,263 63,914
Total liabilities \$154,146 \$123,896
Common stock ? \$ 90,000
Retained earnings ? 38,774
Total common equity ? \$128,774
Total liabilities and equity ? \$252,670

Cumberland Industries: Balance Sheets as of December 31 (Thousands of Dollars) View PDF

Cumberland Industries: Balance Sheets as of December 31 (Thousands of Dollars) (continued) View PDF

c. Construct the statement of cash flows for 2010.

Analysis of Financial Statements: Spreadsheet Problem

(3–15) Build a Model: Ratio Analysis
Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbook’s Web site. Joshua & White (J&W) Technologies’s financial statements are also shown below. Answer the following questions. (Note: Industry average ratios are provided in Ch03 P15 Build a Model.xls.)

Analysis of Financial Statements: Spreadsheet Problem

a. Has J&W’s liquidity position improved or worsened? Explain.

b. Has J&W’s ability to manage its assets improved or worsened? Explain.

c. How has J&W’s profitability changed during the last year? d. Perform an extended Du Pont analysis for J&W for 2009 and 2010. What do these results tell you?

e. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and liabilities?

f. Perform a percentage change analysis. What does this tell you about the change in profitability and asset utilization?

Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars)
Assets 2010 2009 Liabilities &Equity 2010 2009

Cash and cash equivalents \$ 21,000 \$ 20,000 Accounts payable \$ 33,600 \$ 32,000
Short-term investments 3,759 3,240 Accruals 12,600 12,000
Accounts receivable 52,500 48,000 Notes payable 19,929 6,480

Inventories 84,000 56,000 Total current liabilities \$ 66,129 \$ 50,480

Total current assets \$161,259 \$127,240 Long-term debt 67,662 58,320

Net fixed assets 218,400 200,000 Total liabilities \$133,791 \$108,800

Total assets \$379,659 \$327,240 Common stock 183,793 178,440

Retained earnings 62,075 40,000

Total common equity \$245,868 \$218,440

Total liabilities & equity \$379,659 \$327,240

Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) View PDF

Joshua & White Technologies December 31 Income Statements (Thousands of Dollars)
2010 2009

Sales \$420,000 \$400,000
Expenses excluding depr. & amort. 327,600 320,000

EBITDA \$ 92,400 \$ 80,000
Depreciation and amortization 19,660 18,000

EBIT \$ 72,740 \$ 62,000
Interest expense 5,740 4,460
EBT \$ 67,000 \$ 57,540
Taxes (40%) 26,800 23,016
Net income \$ 40,200 \$ 34,524
Common dividends \$ 18,125 \$ 17,262

Joshua & White Technologies December 31 Income Statements (Thousands of Dollars) View PDF

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