You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So your first job will be to recreate the firm's cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. It earned $5 million in net income during the year but paid $850,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.6 million of property, plant, and equipment the majority having a useful life of more than 20 years and falling under the alternative depreciation system. You have just spoken to the firm's accountants and learned that annual depreciation expense for the year is $450,000. The purchase price for the property, plant, and equipment represents additions before depreciation. Finally, you have determined. that the only financing done by the firm was to issue long-term debt of $1 million at a 7% interest rate. What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.
You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So your first job will be to recreate the firm's cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. It earned $5 million in net income during the year but paid $850,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.6 million of property, plant, and equipment the majority having a useful life of more than 20 years and falling under the alternative depreciation system. You have just spoken to the firm's accountants and learned that annual depreciation expense for the year is $450,000. The purchase price for the property, plant, and equipment represents additions before depreciation. Finally, you have determined. that the only financing done by the firm was to issue long-term debt of $1 million at a 7% interest rate. What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So your first job
will be to recreate the firm's cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained
constant during the year. It earned $5 million in net income during the year but paid $850,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.6 million of
property, plant, and equipment the majority having a useful life of more than 20 years and falling under the alternative depreciation system. You have just spoken to the firm's accountants and
learned that annual depreciation expense for the year is $450,000. The purchase price for the property, plant, and equipment represents additions before depreciation. Finally, you have determined
that the only financing done by the firm was to issue long-term debt of $1 million at a 7% interest rate. What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to
arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.
$
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