Financial information for Powell Panther Corporation is shown here. FREE CASH FLOW Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2015 2014 Sales $1.200.00 $1,000.00 Operating costs excluding depreciation and amortization 1,020.00 8500 EBITDA 180.0 150.0 Depreciation & amortization 30.00 25.0 Earnings before interest and taxes (EBIT 125.0 21.7 Earnings before taxes (EBT 1283 104.8 Taxes (40%) 51.3 419 629 Net income Common dividends S 60.5 46.4 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2015 2014 Cash and equivalents 120 10.0 Accounts receivable 180.0 150.0 180.0 nventories Total current assets $372.0 $360.0 Net plant and equipment 250.0 Total assets $610.0 Liabilities and Equity Accounts payable 90.0 $108.0 Accruals 60.0 Notes payable 670 51.5 $2470 Total current liabilities $201.5 Long-term bonds 150.0 150.0 $3515 Total liabilities $3970 Common stock (50 million shares) 50.0 Retained earnings 2250 Common equity $2750 $258.5 Total liabilities and equity 10.0 a. What was net operating working capital for 2014 and 2015? b. What was the 2015 free cash flow
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Financial information for Powell Panther Corporation is shown here. FREE CASH FLOW Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2015 2014 Sales $1.200.00 $1,000.00 Operating costs excluding depreciation and amortization 1,020.00 8500 EBITDA 180.0 150.0 Depreciation & amortization 30.00 25.0 Earnings before interest and taxes (EBIT 125.0 21.7 Earnings before taxes (EBT 1283 104.8 Taxes (40%) 51.3 419 629 Net income Common dividends S 60.5 46.4 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2015 2014 Cash and equivalents 120 10.0 Accounts receivable 180.0 150.0 180.0 nventories Total current assets $372.0 $360.0 Net plant and equipment 250.0 Total assets $610.0 Liabilities and Equity Accounts payable 90.0 $108.0 Accruals 60.0 Notes payable 670 51.5 $2470 Total current liabilities $201.5 Long-term bonds 150.0 150.0 $3515 Total liabilities $3970 Common stock (50 million shares) 50.0 Retained earnings 2250 Common equity $2750 $258.5 Total liabilities and equity 10.0 a. What was net operating working capital for 2014 and 2015? b. What was the 2015 free cash flow
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