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Questions-Financial Statements

Questions-Financial Statements. Q1). Barrett, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300. If the tax rate is 35 percent, what is the operating cash flow, or OCF?. Q2).

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Questions-Financial Statements

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  1. Questions-Financial Statements

  2. Q1) • Barrett, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300. • If the tax rate is 35 percent, what is the operating cash flow, or OCF?

  3. Q2) • Gordon Driving School’s 2014 balance sheet showed net fixed assets of $3.2 million, and the 2015 balance sheet showed net fixed assets of $3.8 million. The company’s 2015 income statement showed a depreciation expense of $235,000. • What was the company's net capital spending for 2015?

  4. Q3) • Ritter Corporation’s accountants prepared the following financial statements for year-end 2015. • OFCF? • FCF?

  5. OFCF=EBIT-Tax+Depreciation-CAPEX-ΔWC • EBIT: NI-COGS-SG&A-Depreciation:860-620-101=139 • Tax: 0 • CAPEX=ΔLT Assets: 401-381=20 +101=121 • (Since everything is NET… In other words, Depreciation is taking care of, I have to add back depreciation) • ΔWC=WC(2015)-WC(2014)=(87+192-147)-(66+176-126)=132-116=16 • =139-0+101-121-16=103 • FCF=NI+Depreciation-CAPEX+ΔLT Debt-ΔWC • ΔLT Debt=LT Debt(2015)-LT Debt (2014)=167-151=16 • =139+101-121+16-16=119

  6. Q4) • OFCF? • FCF?

  7. OFCF=EBIT-Tax+Depreciation-CAPEX-ΔWC • EBIT=634 • Tax: 162 • CAPEX=ΔLT Assets: 2290-2264=26 +311=337 • (Since everything is NET… In other words, Depreciation is taking care of, I have to add back depreciation) • ΔWC=WC(2015)-WC(2014)=(1239+503+418-686)-(1187+227+522-613) • =1474-1323=151 • =634-162+311-337-151=295 • FCF=NI+Depreciation-CAPEX+ΔLT Debt-ΔWC • ΔLT Debt=LT Debt(2015)-LT Debt (2014)=1300-1350=-50 • =302+311-337+(-50)-151=75

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