corporate finance Chap003newWord下载.docx
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200,000
Shareholders’equity
145,000
Store&
property
100,000
Totalassets
$332,000
Totalliabilities&
Esttime:
01–05
2.Thebalancesheetshowsthepositionofthefirmatonepointintime.Itshowstheamountsofassetsandliabilitiesatthatparticulartime.Inthissenseitislikeasnapshot.Theincomestatementshowstheeffectofbusinessactivitiesovertheentireyear.Sinceitcaptureseventsoveranextendedperiod,itismorelikeavideo.Thestatementofcashflowisliketheincomestatementinthatitsummarizesactivityoverthefullyear,soittooislikeavideo.
3.Accountingrevenuesandexpensescandifferfromcashflowsbecausesomeitemsincludedinthecomputationofrevenuesandexpensesdonotentailimmediatecashflows.Forexample,salesmadeoncreditareconsideredrevenueeventhoughcashisnotcollecteduntilthecustomermakesapayment.Also,depreciationexpensereducesnetincome,butdoesnotentailacashoutflow.Conversely,somecashflowsarenotincludedinrevenuesorexpenses.Forexample,collectionofaccountsreceivableresultsinacashinflowbutisnotrevenue.Purchasesofinventoryrequirecashoutlaysbutaretreatedasinvestmentsinworkingcapital,notasexpenses.
4.Workingcapitaloughttobeincreasing.Thefirmwillbebuildingupstocksofinventoryasitrampsupproduction.Inaddition,assalesincrease,accountsreceivablewillincreaserapidly.Whileaccountspayablewillprobablyalsoincrease,theincreaseinaccountsreceivablewilltendtodominatesincesalespricesexceedinputcosts.
5.a.Taxes=(0.10$8,500)+0.15($20,000$8,500)=$2,575
Averagetaxrate=$2,575/$20,000=0.12875=12.88%
Marginaltaxrate=15%
b.Taxes=(0.10$8,500)+0.15($34,500$8,500)+0.25($50,000$34,500)
=$8,625
Averagetaxrate=$8,625/$50,000=0.1725=17.25%
Marginaltaxrate=25%
c.Taxes=(0.10$8,500)+0.15($34,500$8,500)+0.25($83,600$34,500)
+0.28($174,400$83,600)+0.33($300,000$174,400)=$83,897
Averagetaxrate=$83,897/$300,000=0.279657=27.97%
Marginaltaxrate=33%
d.Taxes=(0.10$8,500)+0.15($34,500$8,500)+0.25($83,600$34,500)
+0.28($174,400$83,600)+0.33($379,150$174,400)
+0.35($3,000,000–$379,150)=$1,027,314
Averagetaxrate=$1,027,314/$3,000,000=0.342438=34.24%
Marginaltaxrate=35%
06–10
6.Taxes=(0.15$50,000)+0.25($75,000$50,000)+0.34($100,000$75,000)
=$22,250
Averagetaxrate=$22,250/$100,000=0.2225=22.25%
Marginaltaxrate=34%
7.Taxes=(0.10$17,000)+0.15($69,000$17,000)+0.25($95,000$69,000)
=$16,000
Averagetaxrate=$16,000/$95,000=0.168421=16.84%
8.a.Cashwillincreaseasonecurrentasset(inventory)isexchangedforanother(cash).
b.Cashwillincrease.Themachinewillbringincashwhenitissold,buttheleasepaymentswillbemadeoverseveralyears.
c.Thefirmwillusecashtobuybackthesharesfromexistingshareholders.Cashbalancewilldecrease.
9.a.Thefactthatstart-upfirmstypicallyhavenegativenetcashflowsforseveralyearsdoesnotmeantheyarefailing.Start-upfirmsinvestininventoriesandotherassetsdesignedtoproduceincomeinlaterperiods.
b.Accountingprofitsforstart-upbusinessesarealsocommonlynegativebecausethesefirmsincurcosts,suchasadvertising,thatcannotberecordedonthebalancesheet.Thesecostsaregeneraladministrativeexpensesthefirmincursineachperiod,notinvestmentslikethoseininventoriesthatarebuiltupforfuturesales.
10.a.Inearly2010investorssawthevalueofassetsonthebooksofthesebanksasworthlessthanthevaluerecorded,whichmaybehistoricalvalue.Loansaretheprimaryassetsforbanks,andinvestorsperceivedahighlikelihoodthattheloansthesebanksmadewoulddefault.Ifso,thebankswouldneedtowritedowntheirvalues,reducingincomeavailabletoshareholders.
b.Incontrasttothebanks,investorsperceivedtheassetsofthiscompanytobeworthmorethanthehistoricalvaluepresentedonthecompany’sbook.Consistentwiththeanalysisinpart(a),shareholdersinthiscompanyareexpectingtohavehigherincomeinfutureperiods,andthevalueofthecompany’sassetsareexpectedtogrow.
11.Thetablebelowshowsthefirm’snetincomeandinvestmentinnetworkingcapitalforeachmonthfromJanuarytoApril.SalesrevenueandproductioncostsarerecognizedatthetimeofsaleinFebruary.Sincethefirmneitherpaysforgoodsnorreceivescashforsales,cashflowiszeroinJanuaryandFebruary.CashflowoccursinMarchandApril,whencashisactuallybeingexchanged.ThesowearsarepaidforinMarchandcashisreceivedforthepursesinApril.
ValueAddedInc.(in000s)
a.
January
February
March
April
Sales
$0
$2,000
Costofgoodssold
$1,000
Netincome
Inventories
$0
2,000
0
Networkingcapital
b.,c.
Cashflow
–$1,000
Cashflow=netincome–changeinnetworkingcapital
11–15
12.Netincome=increaseinretainedearnings+dividends
$900,000=($3,700,000$3,400,000)+dividendsdividends=$600,000
13.Taxesonyoursalary=(0.10$8,500)+0.15($34,500$8,500)
+0.25($70,000$34,500)=$13,625
Taxesoncorporateincome=0.15$30,000=$4,500
Totaltaxes=$13,625+$4,500=$18,125
Ifyourearrangeincomesothatyoursalaryandthefirm'
sprofitareboth$50,000,then:
Taxesonyoursalary=(0.10$8,500)+0.15($34,500$8,025)
+0.25($50,000$34,500)=$8,625
Taxesoncorporateincome=0.15$50,000=$7,500
Totaltaxes=$8,625+$7,500=$16,125
Totaltaxesarereducedby$18,125$16,125=$2,000.
14.a.Bookvalueequalsthe$200,000thefounderofthefirmhascontributedintangibleassets.Marketvalueequalsthevalueofhispatentplusthevalueoftheproductionplant:
$50,000,000+$200,000=$50,200,000.
b.Pricepershare=$50.2million/2millionshares=$25.10
Bookvaluepershare=$200,000/2millionshares=$0.10
15.
$10,000
6,500
General&
administrativeexpenses
1,000
Depreciationexpense
EBIT
1,500
Interestexpense
500
Taxableincome
Taxes(35%)
350
$650
Cashflowfromoperations=netincome+depreciationexpense=$1,650
16.Cashflowfromoperationscanbepositiveevenifnetincomeisnegative.Forexample,ifdepreciationexpensesarelarge,thennegativenetincomemightcorrespondtopositivecashflowbecausedepreciationistreatedasanexpenseincalculatingnetincomebutdoesnotrepresentacashoutflow.
Conversely,ifnetincomeispositive,butalargeportionofsalesaremadeoncredit,cashflowcanbenegativesincethesalesarerevenuebutdonotyetgeneratecash.LookbacktoTable3.4andyouwillseethatincreasesinaccountsreceivablereducecashprovidedbyoperations.
17.Thecalculationsarepresentedinthefollowingtable.Salesoccurinquarters2and3,sothisiswhenthecostofgoodssoldisrecognized.Therefore,netincomeiszeroinquarters1and4.Inquarter1,theproductionofthekitsistreatedasaninvestmentininventories.Thelevelofinventoriesthenfallsasgoodsaresoldinquarters2and3.Accountsreceivableinquarters2and3equalthesalesinthosequarterssinceittakesonequarterforreceivablestobecollected.Noticethatcashflowinquarter1equalsthecostofproducingthekitsandthatinquarters3and4cashflowequalscashreceivedforthekitspreviouslysold.
Quarter1
Quarter2
Quarter3
Quarter4
$0
$550
$600
$0
$50
$100
b.,c.
$1,000
$500
550
600
$1,050
18.Cashflow=profitsaccountsreceivable10,000
+accountspayable+5,000
inventory(2,000)
Cashflow=profits10,000+5,000(2,000)=profits3,000
Therefore,cashflowis$3,000lessthanprofits.Thiscorrespondstotheincreaseof$3,000innetworkingcapital.
19.a.Ifthefirmpaidincometaxesof$2,000,andtheaveragetaxratewas20%,thentaxableincomemusthavebeen:
$2,000/0.20=$10,000.
Therefore:
Netincome=taxableincometaxes=$8,000
b.
Revenues
$?
?
Costofgoodssold
8,000
Administrativeexpenses
3,000
Depreciationexpense
Interestexpense
Taxableincome
$10,000[frompart(a)]
Weconcludethatrevenueswere$23,000.
c.
$23,000
EBIT
$11,000
20.a.
Sales
$14.00million
8.00
1.00
2.00
3.00
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