You work as a freelance accounting professional and have been recently engaged by the auditors of Life-Positive Inc. for an assignment. In examining the company’s records, you have extracted the following information: Life-Positive’s Account Balances 2021 ($) 2022 ($) Accounts Payable 24,600.00 21,250.00 Accounts receivable 15,700.00 12,340.00 Cash 23,450.00 28,600.00 Cost of goods sold 19,700.00 23,000.00 Depreciation 3,090.00 4,590.00 Dividends 5,800.00 10,800.00 Interest 2,340.00 2,890.00 Inventory 7,050.00 8,640.00 Long-term debt 28,000.00 30,000.00 Net fixed assets 41,500.00 48,000.00 Other expenses 2,400.00 2,800.00 Sales 58,000.00 62,500.00 Short-term Notes Payable 2,890.00 2,340.00 Shares outstanding 85,000.00 90,000.00 The tax rate is 32% Required: 1. Calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders for 2022. 2. Calculate the Dividends per Share and Earnings per Share for each year for Brown Company. 3. Briefly comment on the company’s cash flows for 2022 in light of an expansion plan which will be financed by both debt and equity.
You work as a freelance accounting professional and have been recently engaged by the auditors of Life-Positive Inc. for an assignment. In examining the company’s records, you have extracted the following information:
|
Life-Positive’s Account Balances |
2021 ($) |
2022 ($) |
|
Accounts Payable |
24,600.00 |
21,250.00 |
|
|
15,700.00 |
12,340.00 |
|
Cash |
23,450.00 |
28,600.00 |
|
Cost of goods sold |
19,700.00 |
23,000.00 |
|
|
3,090.00 |
4,590.00 |
|
Dividends |
5,800.00 |
10,800.00 |
|
Interest |
2,340.00 |
2,890.00 |
|
Inventory |
7,050.00 |
8,640.00 |
|
Long-term debt |
28,000.00 |
30,000.00 |
|
Net fixed assets |
41,500.00 |
48,000.00 |
|
Other expenses |
2,400.00 |
2,800.00 |
|
Sales |
58,000.00 |
62,500.00 |
|
Short-term Notes Payable |
2,890.00 |
2,340.00 |
|
|
|
|
|
Shares outstanding |
85,000.00 |
90,000.00 |
The tax rate is 32%
Required:
1. Calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders for 2022.
2. Calculate the Dividends per Share and Earnings per Share for each year for Brown Company.
3. Briefly comment on the company’s
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