3.1.

Balance sheet: Given the following information about Elkridge

Sporting Goods, Inc., construct a balance sheet for June 30,
2017. On that date the firm had cash and marketable securities of
$25,135, accounts receivable of $43,758, inventory of $167,112,
net fixed assets of $325,422, and other assets of $13,125. It had
accounts payables of $67,855, notes payables of $36,454, long-
term debt of $223,125, and common stock of $150,000. How
much retained earnings did the firm have?

Cash and Market Securiti $25,135

Accounts Recievable $43,758
Inventory $167,112
Net Fixed Assets $325,422
Other Assets $13,125
Notes Payable $67,855
Long Term Debt $36,454
Common Stock $150,000

How Much retained earnings did the firm have

3.5. Working capital: Laurel Electronics reported the
following information at its annual meeting: The
company had cash and marketable securities worth
$1,235,455, accounts payables worth $4,159,357,
inventory of $7,121,599, accounts receivables of
$3,488,121, short-term notes payable worth
$1,151,663, and other current assets of $121,455.
What is the company’s net working capital?
3.6. Working capital: The financial information for
Laurel Electronics referred to in problem 3.5
is all book value. Suppose marking-to-market
reveals that the market value of the firm’s
inventory is 20 percent below its book value
and its receivables are 25 percent below its
book value. The market value of its current
liabilities is identical to the book value. What
is the firm’s net working capital using market
values? What is the percentage change in
net working capital?
3.7.Income statement: The Oakland Mills Company has
disclosed the following financial information in its
annual reports for the period ending March 31, 2017:
sales of $1.45 million, cost of goods sold of
$812,500, depreciation expenses of $175,000, and
interest expenses of $89,575. Assume that the firm
has an average tax rate of 35 percent. What is the
company’s net income? Set up an income statement
to answer the question.
3.9. Cash flows: During 2017, Towson
Recording Company increased its
investment in marketable securities by
$36,845, funded fixed-assets acquisition
by $109,455, and had marketable
securities of $14,215 mature. What is the
net cash used in investing activities?
3.10.Cash flows: Caustic Chemicals identified
the following cash flows as significant in
their year end meeting with analysts:
During the year Caustic repaid existing
debt of $312,080, and raised additional
debt capital of $650,000. It also
repurchased stock in the open markets
for a total of $45,250. What is the net
cash provided by financing activities?
3.12 Cash flows: Given the data for Oakland
Mills Company in Problem 3.7, compute
the cash flows to investors from operating
activity.
3.13 Cash flows: Hillman Corporation reported
current assets of $3,495,055 for the year
ending December 31, 2017 and current
assets of $3,103,839 for the year ending
December 31, 2016. Current liabiliites for the
firm were $2,867,225 and $2,760,124 at the
end of 2017 and 2016, respectively.
Compute the cash flow invested in net
working capital at Hillman Corporation during
2017.
3.14 Cash flows: Del Bridger Construction had
long-term assets before depreciation of
$990,560 on December 31, 2016 and
$1,211,105 on December 31, 2017. How
much cash flow was invested in long-term
assets by Del Bridge during 2017?
3.17. Tax: Manz Property Management Company
announced that in the year ended June 30, 2017,
its earnings before taxes amounted to $1,478,936.
Calculate its taxes using Exhibit 3.6 in the text.

Earnings before interest and taxes $1,478,936

U.S. Federal Corporate Income Tax Rates for 2016

Taxable Income from Upto Rate
0 50,000 15%
50,001 75000 25%
75001 100,000 34%
100,001 335,000 39%
335,001 10,000,000 34%
10,000,001 15,000,000 35%
15,000,001 18,333,333 38%
18,333,334 0% 35%
3.18 Balance sheet: Tim Dye, the CFO of Blackwell
Automotive, Inc., is putting together this year’s
financial statements. He has gathered the following
information: The firm had a cash balance of $23,015,
accounts payable of $163,257, common stock of
$313,299, retained earnings of $512,159, inventory of
$212,444, goodwill and other assets equal to
$78,656, net plant and equipment of $711,256, and
notes payable of $21,115. It also has accounts
receivable of $141,258 and other current assets of
$11,223. How much long-term debt does Blackwell
Automotive have?
3.19 Working capital: Mukhopadhya Network Associates has a
current ratio of 1.60, where the current ratio is defined as
follows: Current ratio = Current assets/Current liabilities.
The firm's current assets are equal to $1,233,265, its
accounts payables are $419,357, and its notes payables
are $351,663. Its inventory is currently at $721,599. The
company plans to raise funds in the short-term debt
market and invest the entire amount in additional
inventory. How much can notes payable increase without
the current ratio falling below 1.50?
3.20 Market value: Reservoir Bottling Co. reported the
following information at the end of the year.
Total current assets are worth $237,513 at book
value and $219,344 at market value. In addition,
plant and equipment with a market of $343,222,
and a book value of $362,145. The company’s
total current liabilities are valued at market for
$134,889 and has a book value of $129,175.
Both the book value and the market value of its
long-term debt is $144,000. If the company’s
total assets are equal to a market value of
$562,566 and a book value of $599,658, what is
the difference in the book value and market
value of its stockholders’ equity?
3.21 Income statement: Nimitz Rental Company
provided the following information to its
auditors. For the year ended March 31, 2017,
the company had revenues of $878,412,
general and administrative expenses of
$352,666, depreciation expenses of
$131,455, leasing expenses of $108,195,
and interest expenses equal to $78,122. If
the company’s average tax rate is 34
percent, what is its net income after taxes?
3.22 Income statement: Sosa Corporation recently reported
an EBITDA of $31.3 million and net income of $9.7
million. The company had $6.8 million in interest
expense, and its average corporate tax rate was 35
percent. What was its depreciation and amortization
expense?
3.23. Income statement: Fraser Corporation has announced
that its net income for the year ended June 30, 2017,
was $1,353,412. The company had EBITDA of
$4,967,855, and its depreciation and amortization
expense was equal to $1,112,685. The company’s
average tax rate is 34 percent. What was its interest
expense?
3.24 Income statement: For its most recent fiscal year,
Carmichael Hobby Shop recorded EBITDA of
$512,725.20, EBIT of $362,450.20, zero interest
expense, and cash flow to investors from operating
activitiy of $348,461.25. Assuming there are no non-
cash revenues recorded on the income statement,
what is the firm's net income after taxes?
3.25 Retained earnings: Columbia Construction Company earned
$451,888 during the year ended June 30, 2017. After paying
out $225,794 in dividends, the balance went into retained
earnings. If the firm’s total retained earnings were $846,972
at the end of fiscal year 2017, what were the retained
earnings on its balance sheet on July 1, 2016?
3.26 Cash flows: Refer to the information given in
problem 3.21. What is the cash flow for Nimitz
Rental?
3.27 Tax: Mount Hebron Electrical
Company’s financial statements
indicated that the company had
earnings before interest and taxes of
$718,323. The interest rate on its
$850,000 debt was 8.95 percent.
Calculate the taxes the company is
likely to owe. What are the marginal and
average tax rates for this company?
3.28 The Centennial Chemical Corp. announced that, for
the period ending March 31, 2014, it had earned
income after taxes worth $5,330,275 on revenues of
$13,144,680. The company’s costs (excluding
depreciation and amortization) amounted to 61
percent of sales and it had interest expenses of
$392,168. What is the firm’s depreciation and
amortization expense if its average tax rate is 34
percent?
3.29 Eau Claire Paper Mill, Inc., had, at the
beginning of the fiscal year, April 1, 2013,
retained earnings of $323,325. During the
year ended March 31, 2014, the company
produced net income after taxes of
$713,445 and paid out 45 percent of its net
income as dividends. Construct a statement
of retained earnings and compute the year-
end balance of retained earnings.
3.30 Menomonie Casino Company earned $23,458,933 before
interest and taxes for the fiscal year ending March 31, 2014.
If the casino had interest expenses of $1,645,123, calculate
its tax burden using Exhibit 3.6. What are the marginal and
the average tax rates for this company?

EBIT 23,458,933
Interest expenses 1,645,123

Tax schedule

U.S. Federal Corporate Income Tax Rates for 2013

Taxable Income from Upto Rate
0 $ 50,000 15%
50,001 $ 75,000 25%
75001 $ 100,000 34%
100,001 $ 335,000 39%
335,001 ### 34%
10,000,001 ### 35%
15,000,001 ### 38%
18,333,334 $ - 35%
3.31 Vanderheiden Hog Products Corp. provided the
following financial information for the quarter
ending June $189,425
Net income: 30, 2014:
Depreciation and amortization: $63,114
Increase in receivables: $ 62,154
Increase in inventory: $57,338
Increase in accounts payable: $37,655
Decrease in marketable securities: $27,450

What is this firm's cash flow from operating

activities during this quarter?
                                    
3.32 Cash flows: Analysts following the Tomkovick
Golf Company were given the following information
for the year ended June 30, 2014 and June 30,
2013.
Assets 2014 2013
Cash and marketable securities $ 33,411 $ 16,566
Accounts receivable $ 260,205 $ 318,768
Inventory $ 423,819 $ 352,740
Other current assets $ 41,251 $ 29,912
Total current assets $ 758,686 $ 717,986
Plant and equipment $ 1,931,719 $ 1,609,898
Less: Accumulated depreciation ($419,044) ($206,678)
Net plant and equipment $ 1,512,675 $ 1,403,220
Goodwill and other assets $ 382,145 $ 412,565

Total assets $ 2,653,506 $ 2,533,771

In addition, it was reported that the company had a net income of $3,155,848 and
that depreciation expenses were equal to $212,366 during 2014.
a. Construct a 2014 cash flow statement for this firm.
b. Calculate the net cash provided by operating activities.
c. What is the net cash used in investing activities?
d. Compute the net cash provided by financing activities.
 Liabilities and Equity 2014 2013
Accounts payable and accru $ 378,236 $ 332,004
Notes payable $ 14,487 $ 7,862
Accrued income taxes $ 21,125 $ 16,815
Total current liabilities $ 413,848 $ 356,681
Long-term debt $ 679,981 $ 793,515
Total liabilities $ 1,093,829 $1,150,196
Preferred stock — —
Common stock (10,000 shar $ 10,000 $ 10,000
Additional paid-in capital $ 975,465 $ 975,465
Retained earnings $ 587,546 $ 398,110
Less: Treasury stock $ (13,334) —
Total common equity $ 1,559,677 $1,383,575
Total liabilities and equity $ 2,653,506 $2,533,771
f $3,155,848 and
3.33 Cash flows: Based on the financial statements for
Tomkovick Golf Company, problem 3.32 above,
compute the cash flow invested in net working capital
and the cash flow invested in long-term assets that
you would use in a calculation of the cash flows to
investors for 2014.