a)
To determine: Current assets.
a)
Explanation of Solution
Note:
Current assets is calculated by adding cash, receivables and inventories.
Calculation of current assets:
Hence, current assets is $100
b)
To determine: Net fixed assets.
b)
Explanation of Solution
Note:
Net fixed assets are calculated by subtracting
Calculation of net fixed assets:
Hence, Net fixed asset is $400.
c)
To determine: Total assets.
c)
Explanation of Solution
Note:
Total assets is calculated by adding the total current assets and net fixed assets.
Calculation of total assets:
Hence, Total assets is $500
Total current assets are taken from part (a) and net fixed assets are taken from part (b) calculation.
d)
To determine: Current liabilities.
d)
Explanation of Solution
Note:
Current liabilities is calculated by adding debt due for payment and payables.
Calculation of current liabilities:
Hence, current liabilities is $60
e)
To determine: Total liabilities.
e)
Explanation of Solution
Note:
Total liabilities is calculated by adding total current liabilities and long term debt.
Calculation of total liabilities:
Hence, total liabilities is $410
f)
To determine: Total liabilities and shareholders equity.
f)
Explanation of Solution
Note:
Total liabilities and shareholders’ equity is calculated by adding total liabilities and shareholders’ equity amount.
Calculation of total liabilities and shareholders’ equity:
So, total liabilities & shareholders’ equity is $500.
g)
To determine: EBIT
g)
Explanation of Solution
Note:
Earnings before interest and tax is computed by deducting COGS, selling and administration expenses and depreciation from Net sales.
Calculation of EBIT:
Hence, EBIT is $70.
h)
To determine: Taxable income.
h)
Explanation of Solution
Note:
Taxable income is calculated by deducting interest expenses from the EBIT.
Calculation of taxable income:
So taxable income is $45.
i)
To determine: Net income.
i)
Explanation of Solution
Note:
Net income is calculated by deducting taxes from the total taxable income.
Calculation of taxable income:
Hence, net income is $30.
Want to see more full solutions like this?
Chapter 3 Solutions
BARUCH FUND OF CORPORATE FIN. W/CONNECT
- Don't used Ai solutionarrow_forwardLiterature Review Based Essay on Contemporary Issues of Business Ethics and Corporate Social Responsibility Essay Format Cover Page with your Name Table of Content • Introduction ⚫ Objectives ⚫ Discussion with Literature Support • Conclusion References (10+) Words Limit-3000-3500 wordsarrow_forwardPlease don't use hand ratingarrow_forward
- "Dividend paying stocks cannot be growth stocks" Do you agree or disagree? Discuss choosing two stocks to help justify your view.arrow_forwardA firm needs to raise $950,000 but will incur flotation costs of 5%. How much will it pay in flotation costs? Multiple choice question. $55,500 $50,000 $47,500 $55,000arrow_forwardWhile determining the appropriate discount rate, if a firm uses a weighted average cost of capital that is unique to a particular project, it is using the Blank______. Multiple choice question. pure play approach economic value added method subjective approach security market line approacharrow_forward
- When a company's interest payment Blank______, the company's tax bill Blank______. Multiple choice question. stays the same; increases decreases; decreases increases; decreases increases; increasesarrow_forwardFor the calculation of equity weights, the Blank______ value is used. Multiple choice question. historical average book marketarrow_forwardA firm needs to raise $950,000 but will incur flotation costs of 5%. How much will it pay in flotation costs? Multiple choice question. $50,000 $55,000 $55,500 $47,500arrow_forward
- Question Mode Multiple Choice Question The issuance costs of new securities are referred to as Blank______ costs. Multiple choice question. exorbitant flotation sunk reparationarrow_forwardWhat will happen to a company's tax bill if interest expense is deducted? Multiple choice question. The company's tax bill will increase. The company's tax bill will decrease. The company's tax bill will not be affected. The company's tax bill for the next year will be affected.arrow_forwardThe total market value of a firm is calculated as Blank______. Multiple choice question. the number of shares times the average price the number of shares times the future price the number of shares times the share price the number of shares times the issue pricearrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education