Name-------------------- Rashid ali Jatoi
Roll number------------ 20s/mbanbs/16
Subject------------------- Financial management
Assignment no-------- one problem solving
Supervised --------------Madam Ghazala Tunio
LO 1 (1) Building a balance sheet
Penguin Pucks, Inc.
Balance sheet
Cuurent asset ---------------- 5100 current liabilities -----------4,300
Net fixed asset-------------- 23800 long term debt ------------- 7400
Total asset------------------- 28900 Total liabilities-------------11700
Find the value of share holder equity ?
Ans Equity = Assets – liabities
Equity = 28900 – 11700
= 17200 is the share holder equty
And how much is the NWC ?
NWC = Current asset – current liabilities
= 5100 – 4300
= 800
LO 1 (2) building a income statement
Papa Roch Exterminator
Income statement
Sales ................................................. 586,000
Cost of good sold --------------------------- (247,000)
Gross profit ------------------------------------ 339,000
Depreciation ...................... (43,000)
Interest .................................... (32000)
Taxable income ....................... 264,000
Tax rate is 35% ----------------------------- (92,4000)
Net income ----------------- ------------------- 171,600
LO 1 (3) dividend and retained earning
Net income ------------------------------ 171,000
Dividend paid --------------------------- (73,000)
Addition to retained earning --------- 98000
LO 1 (4) Per-share earnings and dividends
EPS = net income / avg outstanding share
= 171,000 / 85,000
= 2.01
So earning per share is 2.01
Dividends per share = total dividends / total outstanding share
= 73000 / 85000
=0.85 is dividend per share
LO (6) Calculating tax
The reneta co.
2009
Taxable income -------------------------------------------------236,000
Tax rate 39% ----------------------------------------------------- 92,040
Net income -------------------------------------------------------143,960
LO 3 (7) calculate average tax rate and marginal tax rate
First we find the tax bill
.15(50,000) = 7500
.25(75000-50,000) = 6250
.34(100,000-75000) = 8500
.39(236,000-100,000) = 53,040
Now we add = 75290
Our total tax bill is 75,290
Avg tax rate = tax bill / taxable income
= 75290 / 236,000
=0.31902
= 31.902%
Marginal tax rate mean rate of extra tax ypou would pay if you earned
more dollar.s0 if if you erned one more dollar tax eill be 39% so marginal
tax rate is 39%.
LO 4 (10) calculating addition to NWC.
Ans
Saddle Creek, Inc.
Balance sheet
2008 2009 change
Current asset 2100 2250 150
Current liabilities 1380 1710 330
NWC 2008 = 2100 – 1380 = 720
NWC 2009 = 2250 – 1710 = 540
So now addition to net working capital is
Addition NWC = NWC 2009 – NWC 2008
=540 – 720 = -180
LO 4 (11) cash flow to creditors.
Ans
Maria Tennis shop Inc.
Balance sheet
2008-09
Change in borrowing = debt 2009 – debt 2008
= 2.9 million – 2.6 million = .3 million
So,
Cash flow to creditors
Interest p 170,000
- Net new borrowing ( 300,000)
Cash flow to creditors (130,000)
LO 4 (12) cash flow to stock holder.
Maria Tennis shop Inc.
Balance sheet
2008-09
Net new equity raised = equity and surplus paid 2009 – equity and surplus
paid 2008
= 815000 + 5,500,000 - (740,000+5,200,000)
= 6,315,000 – 5,940,000
= 375,000
And dividend paid is 490,000
Cash flow to stockholder
Dividend paid 490,000
- Net nw equity raised (375,000)
Cash flow to stockholder 115,000
The end
