Use the income statement shown next to calculate free cash flow for Rainier Printing for 2021. In addition to the information in the income statement, assume that Rainier had $580,000 in capital expenditures and $380,000 in working capital investments during 2021. Rainier Printing Income Statement January 1 to December 31, 2021 ($ thousands) Net sales Cost of sales Gross profit Operating expense Depreciation expense Operating income Interest expense Income before tax Tax Income after tax Note: Enter your answer in thousands. Free cash flow $ 8,600 5,800 2,800 1,080 530 1,190 230 960 192 $ 768

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Question

Subject : Accounting

 

Use the income statement shown next to calculate free cash flow for Rainier Printing for 2021. In addition to the information in the
income statement, assume that Rainier had $580,000 in capital expenditures and $380,000 in working capital investments during
2021.
Rainier Printing Income Statement
January 1 to December 31, 2021 ($ thousands)
Net sales
Cost of sales
Gross profit
Operating expense
Depreciation expense
Operating income
Interest expense
Income before tax
Tax
Income after tax
Note: Enter your answer in thousands.
Free cash flow
Show Transcribed Text
$ 8,600
5,800
2,800
1,080
530
1,190
230
960
192
$768
3
In July 2007, News Corporation entered into an agreement to purchase all of the outstanding shares of Dow Jones and Company
for $56 per share. Immediately prior to the News Corporation bid, the shares of Dow Jones traded at $31 per share. The number of
outstanding shares at the time of the announcement was 76 million. The book value of interest-bearing liabilities on the balance
sheet of Dow Jones was $1.41 billion.
a. Estimate the cost of this acquisition to the shareholders of News Corporation
b. What value did News Corporation place on the control of Dow Jones and Company?
Note: For all requirements, enter your answers in billions rounded to 2 decimal places.
Estimated cost of the acquisition
Value of control
billion
billion
Transcribed Image Text:Use the income statement shown next to calculate free cash flow for Rainier Printing for 2021. In addition to the information in the income statement, assume that Rainier had $580,000 in capital expenditures and $380,000 in working capital investments during 2021. Rainier Printing Income Statement January 1 to December 31, 2021 ($ thousands) Net sales Cost of sales Gross profit Operating expense Depreciation expense Operating income Interest expense Income before tax Tax Income after tax Note: Enter your answer in thousands. Free cash flow Show Transcribed Text $ 8,600 5,800 2,800 1,080 530 1,190 230 960 192 $768 3 In July 2007, News Corporation entered into an agreement to purchase all of the outstanding shares of Dow Jones and Company for $56 per share. Immediately prior to the News Corporation bid, the shares of Dow Jones traded at $31 per share. The number of outstanding shares at the time of the announcement was 76 million. The book value of interest-bearing liabilities on the balance sheet of Dow Jones was $1.41 billion. a. Estimate the cost of this acquisition to the shareholders of News Corporation b. What value did News Corporation place on the control of Dow Jones and Company? Note: For all requirements, enter your answers in billions rounded to 2 decimal places. Estimated cost of the acquisition Value of control billion billion
Calculate free cash flow for 2021 for Monarch Textiles, Incorporated, based on the financial information that follows. Assume that
all current liabilities are non-interest-bearing liabilities and that no fixed assets were sold or disposed of during 2021.
Sales
Cost of sales
Income statement
Operating expenses
Depreciation
Interest expense
Earnings before taxes
Tax
Net income
Free cash flow
Monarch Textiles, Incorporated ($ thousands)
c
2021
1,400 Current assets
Note: Round your answer to the 1000s place.
760 Net fixed assets
120 Current liabilities
70
50
400
160
240
Selected balance sheet items
2020
400
140
250
2021
550
280
330
Transcribed Image Text:Calculate free cash flow for 2021 for Monarch Textiles, Incorporated, based on the financial information that follows. Assume that all current liabilities are non-interest-bearing liabilities and that no fixed assets were sold or disposed of during 2021. Sales Cost of sales Income statement Operating expenses Depreciation Interest expense Earnings before taxes Tax Net income Free cash flow Monarch Textiles, Incorporated ($ thousands) c 2021 1,400 Current assets Note: Round your answer to the 1000s place. 760 Net fixed assets 120 Current liabilities 70 50 400 160 240 Selected balance sheet items 2020 400 140 250 2021 550 280 330
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