Assessment 2 | Complete Solution

Assessment 2

Problem 1: Building a Balance Sheet: Jones, Incorporated has net fixed assets of $22,500, current assets of $8,200, current liabilities of $6,400, and long-term debt of $12,500. What is the value of the company's stockholders equity and net working capital?

Problem 2: Building an Income Statement: Tanner, Incorporated has sales of $863,000, costs of $407,000, depreciation expenses of $58,000, and interest expenses of $23,600, with a tax rate of 35 percent. Calculate the net income for the firm. If the company paid out $77,000 in cash dividends, calculate the increase to retained earnings.

Problem 3: Calculating Operating Cash Flow: Willard, Incorporated has sales of $26,400, costs of $9,400, depreciation expense of $1,500, interest expense of $925, and a tax rate of 40 percent. Calculate the operating cash flow.

Problem 4: Equity Multiplier and Return on Equity: Drake Company has a return on assets of 10.75 percent, total equity of $875,000, and a debt-equity ratio of 0.85. What is the equity multiplier? What is the return on equity? What is the net income?

Problem 5: Sustainable Growth: GTS Corporation has a 12 percent ROE and a 30 percent payout ratio. Calculate its sustainable growth rate.

Problem 6: Calculating Taxable Income: The Conrad Company has $267,000 in taxable income. Using the rates on the taxable income table below, calculate their average tax rate and marginal tax rate. Problem 6. Calculating Taxable Income Taxable Income Tax Rate

0–50,000.
15%
50,001.–75,000.
25%
75,001.–100,000.
34%
100,001.–335,000.
39%
335,001–10,000,000.
34%
10,000,001–15,000,000.
35%
15,000,001–18,333,333.
38%
18,333,334+
35%