PC 35 A Comparative Balance Sheet 2018 2017 Current Assets Cash $94,300 $21,500 Accts Receivable 14,700 21,400 Merchandise Inventory 62,200 59,200 Current Liabilities Accounts Payable 31,600 29,100 Accrued Liabilities 11,200 11,500 2018 transactions Payment of cash dividends $18,200 Purchase of equipment with cash 54,800 Issuance of long-term notes payable to borrow cash 44,000 Issuance of common stock for cash 113,000 Depreciation expense 17,300 Purchase of building with cash 101,000 Net income 66,600 Johnson Educational Supply Statement of Cash Flows Year Ended December 31, 2018 Cash Flows from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities: Net cash provided by (used for Operating Activities)
Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
PC 35 A
Comparative
Current Assets
Cash $94,300 $21,500
Accts Receivable 14,700 21,400
Merchandise Inventory 62,200 59,200
Current Liabilities
Accounts Payable 31,600 29,100
Accrued Liabilities 11,200 11,500
2018 transactions
Payment of cash dividends $18,200
Purchase of equipment with cash 54,800
Issuance of long-term notes payable to borrow cash 44,000
Issuance of common stock for cash 113,000
Purchase of building with cash 101,000
Net income 66,600
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Johnson Educational Supply |
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Statement of |
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Year Ended December 31, 2018 |
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Cash Flows from Operating Activities: |
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Net Income |
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Adjustments to Reconcile Net Income to Net Cash |
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Provided by (Used for) Operating Activities: |
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Net cash provided by (used for Operating Activities)
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