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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