A. Key input data for Vanguard Pharmaceuticals is listed below. This information includes the sales revenue from last year, the operating costs (excluding depreciation) as a % of sales, the total amount of net fixed assets at the end of last year, depreciation as a % of net fixed assets, total interest expense, the tax rate, and the % of net income that Vanguard paid out as dividends (the Dividend Payout Ratio). Given this information, construct Vanguard's income statement. Also calculate common dividends and the addition to retained earnings.

The input information required for the problem is outlined in the "Key Input Data" section below. Using this data and the balance sheet above, we constructed the income statement shown below.

Key Input Data for Vanguard Pharmaceuticals

2016

(Thousands of dollars)

Sales Revenue

$227,500

Expenses (excluding depreciation) as a percent of sales

68.0%

Net fixed assets

$33,500

Depr. as a % of net fixed assets

8.0%

Tax rate

32.0%

Interest expense

$4,275

Dividend Payout Ratio

20.0%

Vanguard Pharmaceuticals: Income Statement (Thousands of dollars)

2016

Sales

$227,500

Operating costs excluding depreciation

$154,700

EBITDA

$72,800

Depreciation (Vanguard has no amortization charges)

$2,680

EBIT

$70,120

Interest expense

$4,275

EBT

$65,845

Taxes

$21,070

Net income

$44,775

Common dividends

$8,955

Addition to retained earnings

B. Vanduard Pharmaceuticals' partial balance sheets are shown below. Vanguard issued $10,000,000 of new common stock in the most recent year. Using this information and the results from part a, fill in the missing values for common stock, retained earnings, total common equity, and total liabilities and equity.

Dollar value of common stock issued (in thousands of dollars)

$10,000

Vanguard Industries December 31 Balance Sheets

(in thousands of dollars)

2016

2015

Assets

Cash and cash equivalents

$136,920

$74,625

Short-term investments

11,400

15,100

Accounts Receivable

108,470

85,527

Inventories

38,450

34,982

Total current assets

$295,240

$210,234

Net fixed assets

33,500

42,436

Total assets

$328,740

$252,670

Liabilities and equity

Accounts payable

$30,761

$23,109

Accruals

30,405

22,656

Notes payable

12,717

14,217

Total current liabilities

$73,883

$59,982

Long-term debt

80,263

63,914

Total liabilities

$154,146

$123,896

Common stock

$100,000

$90,000

Retained earnings

74,594

38,774

Total common equity

$174,594

$128,774

Total liabilities and equity

$328,740

$252,670

Check for balancing (this should be zero):

C. Construct the statement of cash flows for the most recent year.
Statement of Cash Flows
(in thousands of dollars)
Operating Activities
Net Income
Adjustments:
Noncash adjustment:
Depreciation
Due to changes in working capital:
Due to change in accounts receivable
Due to change in inventories
Due to change in accounts payable
Due to change in accruals
Net cash provided (used) by operating activities
Investing Activities
Cash used to acquire gross fixed assets
Due to change in short-term investments
Net cash provided (used) by investing activities
Financing Activities
Due to change in notes payable
Due to change in long-term debt
Due to change in common stock
Payment of common dividends
Net cash provided (used) by financing activities
Net increase/decrease in cash
Add: Cash balance at the beginning of the year
Cash balance at the end of the year
Check: cash balance in statement of cash flows should equal the cash on balance sheets as shown here:
				$136,920

$35,820

Complete the balance sheet and sales information in the table for Esther Industries using the following financial data:

INPUT

DSO

15

Debt ratio

65%

Inventory Turnover

6

Quick ratio

0.85

DATA

Gross profit margin on Sales

30%

Total Asset Turnover

3.5

Cash

Accounts Payable

$0

Sales

Accounts Receivable

Long-term Debt

Costs of Goods Sold

$0

Inventories

Common Stock

$0

Fixed Assets

Retained Earnings

Total Assets

Total Liabilities and Equity