Question 4Financial information for Mango Corporation is shown below:Mango CorporationIncome Statements for the years ended(millions of dollars)2019 ($m)2,4002,0403602018 ($m)2,0001,700300SalesOperating costs excluding depreciation and amortizationEBITDADepreciation and amortizationЕBIT6050300250Interest expense43.440.4209.6EBT256.6Таx (30%)Net incomeCommon dividends77179.6146.662.9146.792.7 Mango CorporationBalance Sheets as of 31 December(millions of dollars)2019 ($m)2018 ($m)AssetsCash2420Accounts receivable360300Inventories360400720Total current assets744Net plant and equipmentTotal assets6001,3445001,220Liabilities and EquityAccounts payable216180Accruals144120Notes payableTotal current liabilities134494103403Long-term bondsTotal liabilities300794100300703100Common stock (50 million shares)Retained earningsTotal equityTotal liabilities and equity4505501,3444175171,220Required:1. What was net operating working capital for 2018 and 2019?2. What was the 2019 free cash flow?3. How would you explain the large increase in 2019 dividends?

Name: Question 4Financial information for Mango Corporation is shown below:
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Description: Question 4Financial information for Mango Corporation is shown below:Mango CorporationIncome Statements for the years ended(millions of dollars)2019 ($m)2,4002,0403602018 ($m)2,0001,700300SalesOperating costs excluding depreciation and amortizationE

Working capital is the capital which the company use for day to day operations. It is calculated by…

Business

Accounting

Question 4 Financial information for Mango Corporation is shown below: Mango Corporation Income Statements for the years ended (millions of dollars) 2018 ($m) 2019 ($m) 2,400 2,040 Sales Operating costs excluding depreciation and amortization EBITDA 2,000 1,700 300 360 Depreciation and amortization ЕBIT 60 300 50 250 Interest expense 43.4 256.6 40.4 209.6 EBT Таx (30%) 77 179.6 146.6 62.9 146.7 92.7 Net income Common dividends

Question 4 Financial information for Mango Corporation is shown below: Mango Corporation Income Statements for the years ended (millions of dollars) 2018 ($m) 2019 ($m) 2,400 2,040 Sales Operating costs excluding depreciation and amortization EBITDA 2,000 1,700 300 360 Depreciation and amortization ЕBIT 60 300 50 250 Interest expense 43.4 256.6 40.4 209.6 EBT Таx (30%) 77 179.6 146.6 62.9 146.7 92.7 Net income Common dividends

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

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Mango Corporation
Balance Sheets as of 31 December
(millions of dollars)
2019 ($m)
2018 ($m)
Assets
Cash
24
20
Accounts receivable
360
300
Inventories
360
400
720
Total current assets
744
Net plant and equipment
Total assets
600
1,344
500
1,220
Liabilities and Equity
Accounts payable
216
180
Accruals
144
120
Notes payable
Total current liabilities
134
494
103
403
Long-term bonds
Total liabilities
300
794
100
300
703
100
Common stock (50 million shares)
Retained earnings
Total equity
Total liabilities and equity
450
550
1,344
417
517
1,220
Required:
1. What was net operating working capital for 2018 and 2019?
2. What was the 2019 free cash flow?
3. How would you explain the large increase in 2019 dividends?

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