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2-5A. (Measuring casb flows) Calculate the free cash flows for Pamplin, Inc., for the year ended December 31, 2003, both from an asset and a financing perspective. Interpret your results. Pamplin, Inc., Balance Sheet at 12/31/02 and 12/31/03 ASSETS 2002 2003 Cash $ 200 $ 150 Accounts receivable Inventory Current assets 450 425 550 1,200 2,200 Plant and equipment Less: accumulated depreciation Net plant and equipment Total assets 625 1,200 2,600 (1,200) 1,400 $2,600 (1,000) 1,200 $2,400 LIABILITIES AND OWNERS' EQUITY 2002 2003 $ 200 $ 150 Accounts payable Notes payable-current (9%) Current liabilities $ 200 600 150 $ 300 600 Long-term debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabities and owners' equity $ 300 600 $ 300 600 700 $1,600 $2,400 800 $1,700 $2,600

2-5A. (Measuring casb flows) Calculate the free cash flows for Pamplin, Inc., for the year ended December 31, 2003, both from an asset and a financing perspective. Interpret your results. Pamplin, Inc., Balance Sheet at 12/31/02 and 12/31/03 ASSETS 2002 2003 Cash $ 200 $ 150 Accounts receivable Inventory Current assets 450 425 550 1,200 2,200 Plant and equipment Less: accumulated depreciation Net plant and equipment Total assets 625 1,200 2,600 (1,200) 1,400 $2,600 (1,000) 1,200 $2,400 LIABILITIES AND OWNERS' EQUITY 2002 2003 $ 200 $ 150 Accounts payable Notes payable-current (9%) Current liabilities $ 200 600 150 $ 300 600 Long-term debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabities and owners' equity $ 300 600 $ 300 600 700 $1,600 $2,400 800 $1,700 $2,600

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2-5A. (Measuring casb flows) Calculate the free cash flows for Pamplin, Inc., for the year ended December 31, 2003, both from an asset and a financing perspective. Interpret your results. Pamplin, Ic., Balance Sheet at 12/31/02 and 12/31/03 ASSETS 2002 2003 Cash $ 200 $ 150 Accounts receivable 450 425 550 1,200 2,200 (1,000) 1,200 Inventory Current assets 625 Plant and equipment Less: accumulated depreciation Net plant and equipment Total assets 1,200 2,600 (1,200) 1,400 $2,600 $2,400 LIABILITIES AND OWNERS' EQUITY 2002 2003 $ 200 $ 150 Accounts payable Notes payable-current (9%) Current liabilities 150 $ 300 $ 200 Long-term debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabiities and owners' equity 600 600 $ 300 $ 300 600 600 700 800 $1,600 $2,400 $1,700 $2,600 CHAPTER 2 UNDERSTANDING FINANCIAL STATEMENTS, TAXES, AND CASH FLOWS 55 Pamplin, Inc. Income Statement for years ending 12/31/02 and 12/31/03 ($ in thousands) 2002 2003 $1,200 700 $ 500 30 Sales $1,450 Cost of goods sold Gross profit Operating expenses Depreciation Net operating income Interest expense 850 $ 600 40 220 200 $ 360 $ 250 50 $ 200 60 Net income before taxes $ 300 Taxes (40%) Net income 80 120 $ 120 $ 180
Transcribed Image Text:2-5A. (Measuring casb flows) Calculate the free cash flows for Pamplin, Inc., for the year ended December 31, 2003, both from an asset and a financing perspective. Interpret your results. Pamplin, Ic., Balance Sheet at 12/31/02 and 12/31/03 ASSETS 2002 2003 Cash $ 200 $ 150 Accounts receivable 450 425 550 1,200 2,200 (1,000) 1,200 Inventory Current assets 625 Plant and equipment Less: accumulated depreciation Net plant and equipment Total assets 1,200 2,600 (1,200) 1,400 $2,600 $2,400 LIABILITIES AND OWNERS' EQUITY 2002 2003 $ 200 $ 150 Accounts payable Notes payable-current (9%) Current liabilities 150 $ 300 $ 200 Long-term debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabiities and owners' equity 600 600 $ 300 $ 300 600 600 700 800 $1,600 $2,400 $1,700 $2,600 CHAPTER 2 UNDERSTANDING FINANCIAL STATEMENTS, TAXES, AND CASH FLOWS 55 Pamplin, Inc. Income Statement for years ending 12/31/02 and 12/31/03 ($ in thousands) 2002 2003 $1,200 700 $ 500 30 Sales $1,450 Cost of goods sold Gross profit Operating expenses Depreciation Net operating income Interest expense 850 $ 600 40 220 200 $ 360 $ 250 50 $ 200 60 Net income before taxes $ 300 Taxes (40%) Net income 80 120 $ 120 $ 180
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