英文版罗斯公司理财习题答案Chap002

CHAPTER2ACCOUNTINGSTATEMENTS,TAXESANDCASHFLOWAnswerstoConceptsReviewandCriticalThinkingQuestions1.Liquiditymeasureshowquicklyandeasilyanassetcanbeconvertedtocashwithoutsignificantlossinvalue.It’sdesirableforfirmstohavehighliquiditysothattheyhavealargefactorofsafetyinmeetingshort-termcreditordemands.However,sinceliquidityalsohasanopportunitycostassociatedwithit-namelythathigherreturnscangenerallybefoundbyinvestingthecashintoproductiveassets-lowliquiditylevelsarealsodesirabletothefirm.It’suptothefirm’sfinancialmanagementstafftofindareasonablecompromisebetweentheseopposingneeds2.Therecognitionandmatchingprinciplesinfinancialaccountingcallforrevenues,andthecostsassociatedwithproducingthoserevenues,tobe“booked”whentherevenueprocessisessentiallycomplete,notnecessarilywhenthecashiscollectedorbillsarepaid.Notethatthiswayisnotnecessarilycorrect;it’sthewayaccountantshavechosentodoit.3.Thebottomlinenumbershowsthechangeinthecashbalanceonthebalancesheet.Assuch,itisnotausefulnumberforanalyzingacompany.4.Themajordifferenceisthetreatmentofinterestexpense.Theaccountingstatementofcashflowstreatsinterestasanoperatingcashflow,whilethefinancialcashflowstreatinterestasafinancingcashflow.Thelogicoftheaccountingstatementofcashflowsisthatsinceinterestappearsontheincomestatement,whichshowstheoperationsfortheperiod,itisanoperatingcashflow.Inreality,interestisafinancingexpense,whichresultsfromthecompany’schoiceofdebt/equity.Wewillhavemoretosayaboutthisinalaterchapter.Whencomparingthetwocashflowstatements,thefinancialstatementofcashflowsisamoreappropriatemeasureofthecompany’sperformancebecauseofitstreatmentofinterest.5.Marketvaluescanneverbenegative.Imagineashareofstocksellingfor–$20.Thiswouldmeanthatifyouplacedanorderfor100shares,youwouldgetthestockalongwithacheckfor$2,000.Howmanysharesdoyouwanttobuy?Moregenerally,becauseofcorporateandindividualbankruptcylaws,networthforapersonoracorporationcannotbenegative,implyingthatliabilitiescannotexceedassetsinmarketvalue.6.Forasuccessfulcompanythatisrapidlyexpanding,forexample,capitaloutlayswillbelarge,possiblyleadingtonegativecashflowfromassets.Ingeneral,whatmattersiswhetherthemoneyisspentwisely,notwhethercashflowfromassetsispositiveornegative.7.It’sprobablynotagoodsignforanestablishedcompany,butitwouldbefairlyordinaryforastart-up,soitdepends.8.Forexample,ifacompanyweretobecomemoreefficientininventorymanagement,theamountofinventoryneededwoulddecline.Thesamemightbetrueifitbecomesbetteratcollectingitsreceivables.Ingeneral,anythingthatleadstoadeclineinendingNWCrelativetobeginningwouldhavethiseffect.Negativenetcapitalspendingwouldmeanmorelong-livedassetswereliquidatedthanpurchased.9.Ifacompanyraisesmoremoneyfromsellingstockthanitpaysindividendsinaparticularperiod,itscashflowtostockholderswillbenegative.Ifacompanyborrowsmorethanitpaysininterestandprincipal,itscashflowtocreditorswillbenegative.10.Theadjustmentsdiscussedwerepurelyaccountingchanges;theyhadnocashflowormarketvalueconsequencesunlessthenewaccountinginformationcausedstockholderstorevaluethederivatives.SolutionstoQuestionsandProblemsNOTE:Allend-of-chapterproblemsweresolvedusingaspreadsheet.Manyproblemsrequiremultiplesteps.Duetospaceandreadabilityconstraints,whentheseintermediatestepsareincludedinthissolutionsmanual,roundingmayappeartohaveoccurred.However,thefinalanswerforeachproblemisfoundwithoutroundingduringanystepintheproblem.Basic1.Tofindowner’sequity,wemustconstructabalancesheetasfollows:BalanceSheetCA$5,000CL$4,500NFA23,000LTD13,000OE??TA$28,000TL&OE$28,000Weknowthattotalliabilitiesandowner’sequity(TL&OE)mustequaltotalassetsof$28,000.WealsoknowthatTL&OEisequaltocurrentliabilitiespluslong-termdebtplusowner’sequity,soowner’sequityis:OE=$28,000–13,000–4,500=$10,500NWC=CA–CL=$5,000–4,500=$5002.Theincomestatementforthecompanyis:IncomeStatementSalesS/.527,000Costs280,000Depreciation38,000EBITS/.209,000Interest15,000EBTS/.194,000Taxes(35%)67,900NetincomeS/.126,100Oneequationfornetincomeis:Netincome=Dividends+AdditiontoretainedearningsRearranging,weget:Additiontoretainedearnings=Netincome–DividendsAdditiontoretainedearnings=S/.126,100–48,000Additiontoretainedearnings=S/.78,1003.Tofindthebookvalueofcurrentassets,weuse:NWC=CA–CL.Rearrangingtosolveforcurrentassets,weget:CA=NWC+CL=$900K+2.2M=$3.1MThemarketvalueofcurrentassetsandfixedassetsisgiven,so:BookvalueCA=$3.1MMarketvalueCA=$2.8MBookvalueNFA=$4.0MMarketvalueNFA=$3.2MBookvalueassets=$3.1M+4.0M=$7.1MMarketvalueassets=$2.8M+3.2M=$6.0M4.Taxes=0.15(€50K)+0.25(€25K)+0.34(€25K)+0.39(€273K–100K)Taxes=€89,720Theaveragetaxrateisthetotaltaxpaiddividedbynetincome,so:Averagetaxrate=€89,720/€273,000Averagetaxrate=32.86%.Themarginaltaxrateisthetaxrateonthenext€1ofearnings,sothemarginaltaxrate=39%.5.TocalculateOCF,wefirstneedtheincomestatement:IncomeStatementSales元13,500Costs5,400Depreciation1,200EBIT元6,900Interest680Taxableincome元6,220Taxes(35%)2,177Netincome元4,043OCF=EBIT+Depreciation–TaxesOCF=元6,900+1,200–2,177OCF=元5,9236.Netcapitalspending=NFAend–NFAbeg+DepreciationNetcapitalspending=£4,700,000–4,200,0