Chapter 03 - Blueprint Problems Due onSep4at11:59 PM EDT 3. 0 Financial Statements 4. O The focus on nancial statements in nance is how managers and investors interpret and use them. A flrm's annual report contains both verbal and quantitative information. The quantitative information COI'ISlStS of four nancial statements: (1) Balance Sheet, (2) Income Statement, (3) Statement of Cash Flows, and (4) Statement of Stockholders' Equty. The Ba_l_a_r_|_o_e__s_h_egl_: shows the rm's assets and claims against those assets. In other words, assets are equal to liabilities and equity. Assets are shown in order of their and claims are listed in the order ofwhen they must be paid. Current assets include cash and their equivalents, acoounts _ and inventory, while long-term sasets are those whose useful lives exceed one year. Liabilities are diVIded into and long-term debt. We differentiate between total debt and total liabilities. A company's total debt includes balm its short-term and long-term liabilities. Total liabilities equal plus the company's "free" liabilities. is the differenoe between current assets and current liabilities. while is equal to current assets less the difference between current liabilities and notes payable. is capital supplied by oommon stockholders and represents ownership. The Income statement reports on operations over a period of time. Companies' operating performances can be compared by looking at each rm's EBlT, often referred to as . A typical stockholder focuses on the bottom line of the income statement, . The lnoome statement is tied to the through the retained earnings account. Net income minus paid is equal to the retained earnings for the year. and this amount is added to the cumulative retained earnings from prior years to obtain the year-end retained earnings balance. Management's goal is to maximize the firm's stock pride. The value of any asset, including a share of stock, is based on the the asset is expected to produce. Therefore, managers strive to maximize the available to investors. The _s_t_at_e_|:l_l_e_[|_t_1_1_f_g_a__l3_f_l_o_uir__ shows how much a rm is generating. It is divided into four parts: (1) Operating activities, (2) Investing activities. (3) Financing activities, and (4) Summary. Changes in stockholders' equity during an accounting period are reported in the statement of stookho stock issues, stock repurchases, net income, and paid. '_equlty. Changes in stockholders' equity can come from new Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance Sheets: 2013 201.2 Cash and equivalents $60 $45 Accounts receivable 275 300 Inventories 375 350 Total current assets $710 $695 % Chapter 03 - Blueprint Problems Due unSep4at11159 pm EDT mmm .p to .7353 Net plant and equipment 2,000 1,490 Total assets $2,710 $2,105 Aocounts payable $150 $05 Aocruals 75 50 Notes payable 110 135 Total cun'ent liabiiities $355 $270 Long-term debt 450 290 Common stock 1,225 1,225 Retained earnings 700 400 Total liabiFities and equity $2,710 $2,185 Income Statements: 2013 2012 Sales $2,000 $1,500 Operating cost5 excluding depreciation 1,250 1,000 EBITDA $750 $500 Depreciation and amortization 100 75 EBIT $650 $425 Interest 62 45 EEIT $588 $380 Taxes (40%) 235 152 Net income $353 $228 Dividends paid $53 $48 Addition to retained earnings $300 $180 % Chapter 03 - Blueprint Problems Due unSep4at11:59 PM EDT DEPI'EEIE'IJUI \\ d1 \"1111104 man: I IUIJ 1'3 EBIT $65!] 5425 Interest 62 45 EBT 5533 $38!] Taxw (40%) 255 152 Net income $353 $228 Dividends paid $53 34!! Addition to retained earnings $30!] $18!] Shares autstandlng 100 100 Prlce $25.00 $22.50 WACC 10.00% The balance in the n'n's cash and equivalents account is needed for nperatlons and is not mnsldered "excess\" cash. What Is Rosnan's 2013 net operating working capital [NOWC)? s | | What Is Rosnan's 2013 net working capltal (NWC)? 5| | Check My Work 0= inux-U _ Financial Statemenu Question 1 a\" k Save _bmlt Aignrnent for Giadlng