Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as of December 31 2016 2015 Assets Cash and equivalents Accounts receivable Inventories 32,480 Total current assets $79,480 $70,000 Net plant and equipment 51,000 49,000 Total assets $130,480 $119,000 Liabilities and Equity Accounts payable Accruals 8,000 6,000 29,000 $12,000 $ 11,000 35,000 30,000 $10,200 $9,500 Notes payable 6,700 5,150 Total current liabilities. $24,900 $ 20,650 Long-term bonds 15,000 15,000 Total liabilities $39,900 $ 35,650 Common stock (4,000 shares) 50,000 50,000 EBIT Interest EBT Taxes (40%) Net income Retained earnings 40,580 33,350 Common equity $90,580 $ 83,350 Total liabilities and equity $130,480 $119,000 Income Statement for Year Ending December 31, 2016 Sales $226,000 Operating costs excluding depreciation and amortization 180,000 EBITDA $46,000 Depreciation & amortization 3,000 $43,000 3,500 $39,500 15,800 $23,700 Dividends paid 16,470 What was net operating working capital for 2015 and 2016? What was Arlington's 2016 free cash flow? PLEASE SHOW WORK
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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