Essay about Chapter 3
BA II Plus 2nd .
9 Enter Financial Statements, Cash Flow, and Taxes
Accounting income vs. cash flow
MVA and EVA
Federal tax system
The Annual Report
Balance sheet – provides a snapshot of a firm’s financial position at one point in time.
Income statement – summarizes a firm’s revenues and expenses over a given period of time.
Statement of retained earnings – shows how much of the firm’s earnings were retained, rather than paid out as dividends.
Statement of cash flows – reports the impact of a firm’s activities on cash flows over a given period of time.
Balance Sheet: …show more content…
EBIT (130.948) 190,428
Interest Exp. 136,012 43,828
EBT (266,960) 146,600
Taxes (106,784) 58,640
Net income (160,176) 87,960
No. of shares 100,000 100,000
EPS -1.602 0.88
DPS 0.11 0.22
Stock price 2.25 8.50
Lease pmts 40,000 40,000
1. Little Books Inc. recently reported net income of $3 million. Its operating income
Income Statement (EBIT) was $6 million, and the company pays a 40 percent tax rate. What was the company's interest expense for the year? [Hint: Divide $3 million by (1 - T) = 0.6 to find taxable income.]
2. Pearson Brothers recently reported an EBITDA of $7.5 million and $1.8 million
Income statement of net income. The company has $2.0 million of interest expense and the corporate tax rate is 40 percent. What was the company's depreciation and amortization expense?
Statement of Retained Earnings (2011)
Balance of Retained Earnings 12/31/12 $203,768 Add: Net Income 2013 (160,176)
Less: Dividends paid (11,000)
Balance of Retained Earnings 12/31/13 32,592
3. In its most recent financial statements, Newhouse Inc. reported $50 million of net Statement of