Compute fcf using the adjustment method

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Reference no: EM131438840

FINANCIAL ACCOUNTING ANALYSIS ASSIGNMENT

Question 1: Use the data set of P4-46

a. Prepare CFS using the DIRECT method

b. Prepare FCF statement.

c. Compute FCF using the adjustment method: FCF = CFO* - CFI* 

d. Compute FCF = NOPAT - ΔNOA with (i) Cash excluded and (ii) Cash included. What is the difference between the two FCFs?

Question 2:

Balance Sheet as of December 31                    2014                       2015

Assets

Cash                                                               $ 1,000                  $ 1,100

A/R                                                                  1,500                     1,650

Inv                                                                   2,000                     2,200

Total CA                                                           $4,500                   $4,950

PPE (at cost)                                                      11,000                     12,150

Acc. Depreciation                                               (4,500)                  (5,100)

Net PPE                                                             6,500                       7,050

Total assets                                                       $11,000               $12,000

Liabilities and Equity

Accrued liabilities                                               $800                       $880

A/P                                                                   1,200                     1,320

Notes/Payable                                                   5,500                     6,050

Total CL                                                            $7,500                   $8,250

Long-term debt                                                  2,000                     1,602

Common stock                                                  1,000                     1,000

R/E                                                                  500                         1,148

Total liabilities and equity                                   $11,000                 $12,000

Income Statement for the year Ending December 31, 2015 -

Sales                                                        $10,000

CGS                                                          6,000

Depreciation                                               600

SG&A                                                         1,000

Interest expense                                         600

Taxable Income                                          $ 1,800

Taxes                                                        720                                                                        

Net Income                                                $ 1,080

Required:

a. Prepare FCF statement.

b. Compute FCF using the adjustment method: FCF = CFO* - CFI* 

c. Compute FCF = NOPAT - ΔNOA with (i) Cash excluded and (ii) Cash included. What is the difference between the two FCFs?

Question 3: The income statement, comparative balance sheet, and additional information for LACONIC Corporation for 2015 appear below:

Income Statement:

Revenues:

Sales                                                            $1,400

Gain on sale of equipment                               30                    $1430

Expenses:

CGS                                                              800

Advertising expense                                       50

Depreciation                                                  70

Rent                                                             40

Wages                                                          110

Interest expense on bonds                             14

Income tax                                                   72                      1,156

                                                                                             $  274    

Comparative Balance Sheet

                                                             2014                       2015

Cash                                                       $  75                       $282

A/R                                                         32                           67

Inv                                                         62                         187

Prepaid rent                                            6                            16

Equipment                                              181                         201

Accumulated depreciation                        (16)                        (51)

Totals                                                    $340                       $702      

A/P                                                       $  15                       $105

Wages payable                                      20                           30

Income tax payable                               60                           68

Bonds payable                                      125                         125

Common stock                                     100                         100

R/E                                                     20                         274

Totals                                                  $340                       $702

Other data:

a. Equipment with an original cost of $70 and accumulated depreciation of $35 was sold for $65.

b. Additional equipment was purchased for cash.

c. No additional bonds were issued or retired during the year.

d. Cash dividends were declared and paid during the year.

Required:

a. Prepare FCF statement.

b. Compute FCF using the adjustment method: FCF = CFO* - CFI* 

c. Compute FCF = NOPAT - ΔNOA with (i) Cash excluded and (ii) Cash included. What is the difference between the two ΔNOAs.

Attachment:- Assignment File.rar

Reference no: EM131438840

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len1438840

3/24/2017 5:21:41 AM

Assignment for my Financial Accounting Analysis class, need this done in 3 hours! Additional equipment was purchased for cash. No additional bonds were issued or retired during the year. Cash dividends were declared and paid during the year. Prepare FCF statement.

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