Value Added Inc. buys $16 million of sow's ears at the beginning of January but doesn't pay immediately. Instead, it agrees to pay the bill in March. It processes the ears into silk purses, which it sells for $17 million in February. However, it will not collect payment on the sales until April. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in thousands of dollars not in millions.)

a. What is the firm’s net income in February?

b. What is its net income in March?

c. What is the firm’s net new investment in working capital in January?

d. What is its net new investment in working capital in April?

e. What is the firm’s cash flow in January?

f. What is the firm’s cash flow in February?

g. What is the cash flow in March?

h. What is the cash flow in April?

2014                                                        BALANCE SHEET

CASH FLOW Cash Provided by Operations
Net income	$6,345
Depreciation	1,786
Changes in working capital items
Decrease (increase) in accounts receivable	−86
Decrease (increase) in inventories	−22
Decrease (increase) in other current assets	−121
Increase (decrease) in accounts payable	94
Increase (decrease) in other current liabilities	131
Total decrease (increase) in working capital	−$ 4
Cash provided by operations	$8,127
Cash Flows from Investments
Cash provided by (used for) disposal of (additions to) property, plant, and equipment	−$1,289
Sales (acquisitions) of other long-term assets	__ 31
Cash provided by (used for) investments	−$1,258

Cash Provided by (Used for) Financing Activities
Increase (decrease) in short-term debt	$ 295
Increase (decrease) in long-term debt	2,178
Dividends	−2,530
Repurchases of stock	−7,000
Other	_ −18
Cash provided by (used for) financing activities	−$7,075
Net increase (decrease) in cash and cash equivalents	−$ 206

Transcribed Image Text:

Net sales Other income Cost of goods sold Selling, general, and administrative expenses Depreciation Earnings before interest and income taxes (EBIT) Interest expense Taxable income Taxes Net income Allocation of net income Dividends Addition to retained earnings $ Million % of Sales $ 83,176 337 0.4 54,222 65.2 16,699 1.786 $ 10,806 830 $ 9,976 3.631 $ 6,345 100.0% $2,530 $3,815 20.1 2.1 13.0% 1.0 12.0% 4.4 7.6% 3.0% 4.6% Net sales Other income Cost of goods sold Selling, general, and administrative expenses Depreciation Earnings before interest and income taxes (EBIT) Interest expense Taxable income Taxes Net income Allocation of net income Dividends Addition to retained earnings $ Million % of Sales $ 83,176 337 0.4 54,222 65.2 16,699 1.786 $ 10,806 830 $ 9,976 3.631 $ 6,345 100.0% $2,530 $3,815 20.1 2.1 13.0% 1.0 12.0% 4.4 7.6% 3.0% 4.6%

Answer rating: 100% (QA)

Question Value Added Inc in 000s Jan Feb Mar Apr Sales 0 17000 0 0 Less Cost of good Sold 0 16000 0 ... View the full answer