Ritter Corporation’s accountants prepared the following financial statements for year-end 2019: (Do not round intermediate calculations.)...
|
Ritter Corporation’s accountants prepared the following financial statements for year-end 2019: (Do not round intermediate calculations.) |
| RITTER CORPORATION | ||
| Income Statement | ||
| 2019 | ||
| Revenue | $ | 910 |
| Expenses | 645 | |
| Depreciation | 106 | |
| Net income | $ | 159 |
| Dividends | $ | 139 |
| RITTER CORPORATION | |||||
| Balance Sheets | |||||
| December 31 | |||||
| 2018 | 2019 | ||||
| Assets | |||||
| Cash | $ | 71 | $ | 97 | |
| Other current assets | 181 | 202 | |||
| Net fixed assets | 386 | 406 | |||
| Total assets | $ | 638 | $ | 705 | |
| Liabilities and Equity | |||||
| Accounts payable | $ | 131 | $ | 157 | |
| Long-term debt | 156 | 177 | |||
| Stockholders’ equity | 351 | 371 | |||
| Total liabilities and equity | $ | 638 | $ | 705 | |
| a. | What is the change in cash during 2019? |
| b. | Determine the change in net working capital in 2019. |
| c. | Determine the cash flow generated by the firm’s assets during 2019. |
Homework Answers
Answer to Part a.
Change in Cash = Cash, 2019 – Cash, 2018
Change in Cash = $97 - $71
Change in Cash = $26
Answer to Part b.
Change in Net Working Capital = NWC, 2019 – NWC, 2018
Net Working Capital (NWC) = Current Assets – Current
Liabilities
Net Working Capital (NWC), 2018 = ($71 + $181) - $131
Net Working Capital (NWC), 2018 = $121
Net Working Capital (NWC), 2019 = ($97 + $202) - $157
Net Working Capital (NWC), 2019 = $142
Change in Net Working Capital, 2019 = $142 - $121
Change in Net Working Capital, 2019 = $21
Answer to Part c.
Cash Flow from Assets = Operating Cash Flow - Change in Net Working Capital – Net Capital Spending
Operating Cash Flow = EBIT + Depreciation – Taxes
EBIT = Revenue – Expenses – Depreciation
EBIT = $910 - $645 - $106
EBIT = $159
Operating Cash Flow = $159 + $106 - $0
Operating Cash Flow = $265
Net Capital Spending = Ending FA – Beginning FA +
Depreciation
Net Capital Spending = $406 - $386 + $106
Net Capital Spending = $126
Cash Flow from Assets = $265 - $21 - $126
Cash Flow from Assets = $118
Add Answer to:
Ritter Corporation’s accountants prepared the following
financial statements for year-end 2019: (Do not round
intermediate calculations.)...
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