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The following financial information relate to Lang Industrial Systems Inc. and as a financial analyst you are required to assist with the following problems: Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Property, Plant, and Equipment Less Accumulated Depreciation Net Fixed Assets Total Assets Balance Sheet ($ in Millions) 2022 2021 540 820 550 950 174 400 776 600 Total Current Liabilities 1910 1400 Long-Term Liabilities Long-Term 400 800 100 Liabilities and 2022 Owners' Equity 700 Current Liabilities Accounts Payable Notes Payable Debt Total Long- Term Liabilities Owners' Equity Common Stock ($1 Par) Retained Earnings Total Owners' Equity 2686 2100 Total Liab. and Owners' Equity 1120 810 460 1580 431 431 340 335 675 2021 2686 370 1180 440 440 310 170 480 2100 Income Statement ($ in Millions) 2022 Sales Cost of Goods Sold Administrative Expenses Depreciation Earnings Before Interest and Taxes Interest Expense Taxable Income Taxes Net Income Dividends Addition to Retained Earnings 1100 700 100 74 226 30 196 15 181 16 165

The following financial information relate to Lang Industrial Systems Inc. and as a financial analyst you are required to assist with the following problems: Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Property, Plant, and Equipment Less Accumulated Depreciation Net Fixed Assets Total Assets Balance Sheet ($ in Millions) 2022 2021 540 820 550 950 174 400 776 600 Total Current Liabilities 1910 1400 Long-Term Liabilities Long-Term 400 800 100 Liabilities and 2022 Owners' Equity 700 Current Liabilities Accounts Payable Notes Payable Debt Total Long- Term Liabilities Owners' Equity Common Stock ($1 Par) Retained Earnings Total Owners' Equity 2686 2100 Total Liab. and Owners' Equity 1120 810 460 1580 431 431 340 335 675 2021 2686 370 1180 440 440 310 170 480 2100 Income Statement ($ in Millions) 2022 Sales Cost of Goods Sold Administrative Expenses Depreciation Earnings Before Interest and Taxes Interest Expense Taxable Income Taxes Net Income Dividends Addition to Retained Earnings 1100 700 100 74 226 30 196 15 181 16 165

FINANCIAL ACCOUNTING
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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The following financial information relate to Lang Industrial Systems Inc. and as a financial analyst you are required to assist with the following problems: Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Property, Plant, and Equipment Less Accumulated Depreciation Net Fixed Assets Total Assets Balance Sheet ($ in Millions) 2022 2021 540 820 550 950 174 776 400 Total Current Liabilities 1910 1400 Long-Term Liabilities Long-Term Debt Total Long- Term Liabilities Owners' Equity 2686 600 400 800 100 700 Liabilities and 2022 2021 Owners' Equity 2100 Current Liabilities Accounts Payable Notes Payable Common Stock ($1 Par) Retained Earnings Total Owners' Equity Total Liab. and Owners' Equity 1120 810 460 1580 431 431 340 335 675 2686 370 1180 440 440 310 170 480 2100 Income Statement ($ in Millions) 2022 Sales Cost of Goods Sold Administrative Expenses Depreciation Earnings Before Interest and Taxes Interest Expense Taxable income Taxes Net Income Dividends Addition to Retained Earnings 1100 700 100 74 226 30 196 15 181 16 165
Transcribed Image Text:The following financial information relate to Lang Industrial Systems Inc. and as a financial analyst you are required to assist with the following problems: Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Property, Plant, and Equipment Less Accumulated Depreciation Net Fixed Assets Total Assets Balance Sheet ($ in Millions) 2022 2021 540 820 550 950 174 776 400 Total Current Liabilities 1910 1400 Long-Term Liabilities Long-Term Debt Total Long- Term Liabilities Owners' Equity 2686 600 400 800 100 700 Liabilities and 2022 2021 Owners' Equity 2100 Current Liabilities Accounts Payable Notes Payable Common Stock ($1 Par) Retained Earnings Total Owners' Equity Total Liab. and Owners' Equity 1120 810 460 1580 431 431 340 335 675 2686 370 1180 440 440 310 170 480 2100 Income Statement ($ in Millions) 2022 Sales Cost of Goods Sold Administrative Expenses Depreciation Earnings Before Interest and Taxes Interest Expense Taxable income Taxes Net Income Dividends Addition to Retained Earnings 1100 700 100 74 226 30 196 15 181 16 165
Part A Utilize the 2022 financial statements for Lang Industrial Systems Inc. provided on page 2 and assume that the company is currently operating at below operating capacity. Sales are forecasted to increase by 18% and current assets, costs, and accounts payable are expected to vary by the same amount. The tax rate and dividend payout ratio will remain constant. Depreciation and Interest Expense will remain unchanged. Required: a) Prepare the pro forma Income Statement and Balance Sheet for 2023. Round all pro forma figures to the nearest whole number. b) Based on your computations in (a) above, is external financing needed or does the company have excess financing? If so, by how much and what options does it have? Part B Lang Industrial Systems Inc. is considering raising financing through a bond offering. Details of the proposed bond offering are provided below: Coupon Rate: 8% Time to Maturity: 15 years Frequency of interest payments: Quarterly Required: Given a current yield to maturity of 5.12%, how much should an investor be willing to pay for $1,000 face value of this bond?
Transcribed Image Text:Part A Utilize the 2022 financial statements for Lang Industrial Systems Inc. provided on page 2 and assume that the company is currently operating at below operating capacity. Sales are forecasted to increase by 18% and current assets, costs, and accounts payable are expected to vary by the same amount. The tax rate and dividend payout ratio will remain constant. Depreciation and Interest Expense will remain unchanged. Required: a) Prepare the pro forma Income Statement and Balance Sheet for 2023. Round all pro forma figures to the nearest whole number. b) Based on your computations in (a) above, is external financing needed or does the company have excess financing? If so, by how much and what options does it have? Part B Lang Industrial Systems Inc. is considering raising financing through a bond offering. Details of the proposed bond offering are provided below: Coupon Rate: 8% Time to Maturity: 15 years Frequency of interest payments: Quarterly Required: Given a current yield to maturity of 5.12%, how much should an investor be willing to pay for $1,000 face value of this bond?
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