Balance Sheet (Millions of $) Assets 2018 Cash and securities $3,000 Accounts receivable 15,000 Inventories 18,000 Total current assets $36,000 Net plant and equipment $24,000 Total assets $60,000 Liabilities and Equity Accounts payable $18,630 Accruals 8,370 Notes payable 6,000 Total current liabilities $33,000 Long-term bonds $9,000 Total liabilities $42,000 Common stock $5,040 Retained earnings 12,960 Total common equity $18,000 Total liabilities and equity $60,000 Income Statement (Millions of $) 2018 Net sales $84,000 Operating costs except depreciation 78,120 Depreciation 1,680 Earnings before interest and taxes (EBIT) $4,200 Less interest 900 Earnings before taxes (EBT) $3,300 Taxes 1,320 Net income $1,980 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of $) $693.00 Int rate on notes payable & L-T bonds 6% Federal plus state income tax rate 40% Year-end stock price $47.52 BEP VALUE IS:
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.
|
|
|
|
|
|
Assets |
|
2018 |
|
|
Cash and securities |
|
$3,000 |
|
|
|
|
15,000 |
|
|
Inventories |
|
18,000 |
|
|
Total current assets |
|
$36,000 |
|
|
Net plant and equipment |
|
$24,000 |
|
|
Total assets |
|
$60,000 |
|
|
Liabilities and Equity |
|
|
|
|
Accounts payable |
|
$18,630 |
|
|
Accruals |
|
8,370 |
|
|
Notes payable |
|
6,000 |
|
|
Total current liabilities |
|
$33,000 |
|
|
|
|
|
|
|
Long-term bonds |
|
$9,000 |
|
|
Total liabilities |
|
$42,000 |
|
|
Common stock |
|
$5,040 |
|
|
|
|
12,960 |
|
|
Total common equity |
|
$18,000 |
|
|
Total liabilities and equity |
|
$60,000 |
|
|
|
|
|
|
|
Income Statement (Millions of $) |
|
2018 |
|
|
Net sales |
|
$84,000 |
|
|
Operating costs except |
78,120 |
||
|
Depreciation |
|
1,680 |
|
|
Earnings before interest and taxes (EBIT) |
$4,200 |
||
|
Less interest |
|
900 |
|
|
Earnings before taxes (EBT) |
|
$3,300 |
|
|
Taxes |
|
1,320 |
|
|
Net income |
|
$1,980 |
|
|
|
|
|
|
|
Other data: |
|
|
|
|
Shares outstanding (millions) |
|
500.00 |
|
|
Common dividends (millions of $) |
|
$693.00 |
|
|
Int rate on notes payable & L-T bonds |
6% |
||
|
Federal plus state income tax rate |
40% |
||
|
Year-end stock price |
|
$47.52 |
|
BEP VALUE IS:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
