South Sea Baubles has the following (incomplete) balance sheet and income statement. BALANCE SHEET AT END OF YEAR (Figures in $ millions) Assets 2021 2022 Liabilities and Shareholders' Equity 2021 2022 Current assets $ 101 $ 195 Current liabilities $ 72 $ 93 Net fixed assets 910 1,010 Long-term debt 655 860 INCOME STATEMENT, 2022 (Figures in $ millions) Revenue $ 2,005 Cost of goods sold 1,085 Depreciation 405 Interest expense 251 a&b. What is shareholders’ equity in 2021 and 2022? c&d. What is net working capital in 2021 and 2022? e. What are taxes paid in 2022? Assume the firm pays taxes equal to 21% of taxable income. f. What is cash provided by operations during 2022? g. Net fixed assets increased from $910 million to $1,010 million during 2022. What must have been South Sea’s gross investment in fixed assets during 2022? h. If South Sea reduced its outstanding accounts payable by $46 million during the year, what must have happened to its other current liabilities?
South Sea Baubles has the following (incomplete) balance sheet and income statement. BALANCE SHEET AT END OF YEAR (Figures in $ millions) Assets 2021 2022 Liabilities and Shareholders' Equity 2021 2022 Current assets $ 101 $ 195 Current liabilities $ 72 $ 93 Net fixed assets 910 1,010 Long-term debt 655 860 INCOME STATEMENT, 2022 (Figures in $ millions) Revenue $ 2,005 Cost of goods sold 1,085 Depreciation 405 Interest expense 251 a&b. What is shareholders’ equity in 2021 and 2022? c&d. What is net working capital in 2021 and 2022? e. What are taxes paid in 2022? Assume the firm pays taxes equal to 21% of taxable income. f. What is cash provided by operations during 2022? g. Net fixed assets increased from $910 million to $1,010 million during 2022. What must have been South Sea’s gross investment in fixed assets during 2022? h. If South Sea reduced its outstanding accounts payable by $46 million during the year, what must have happened to its other current liabilities?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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South Sea Baubles has the following (incomplete) balance sheet and income statement.
| BALANCE SHEET AT END OF YEAR | |||||
| (Figures in $ millions) | |||||
| Assets | 2021 | 2022 | Liabilities and Shareholders' Equity | 2021 | 2022 |
|---|---|---|---|---|---|
| Current assets | $ 101 | $ 195 | Current liabilities | $ 72 | $ 93 |
| Net fixed assets | 910 | 1,010 | Long-term debt | 655 | 860 |
| INCOME STATEMENT, 2022 | |
| (Figures in $ millions) | |
| Revenue | $ 2,005 |
|---|---|
| Cost of goods sold | 1,085 |
| 405 | |
| Interest expense | 251 |
a&b. What is shareholders’ equity in 2021 and 2022?
c&d. What is net
e. What are taxes paid in 2022? Assume the firm pays taxes equal to 21% of taxable income.
f. What is cash provided by operations during 2022?
g. Net fixed assets increased from $910 million to $1,010 million during 2022. What must have been South Sea’s gross investment in fixed assets during 2022?
h. If South Sea reduced its outstanding accounts payable by $46 million during the year, what must have happened to its other current liabilities?
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