Patterson Brothers recently reported an EBITDA of $7.5 million and net income of$2.1 million. It had $2.0 million of interest expense, and its corporate tax rate was 30%. What was its charge for depreciation and amortization?

Electronics World Inc. paid out $22.4 million in total common dividends and reported$144.7 million of retained earnings at year-end. The prior year’s retained earnings were $95.5 million. What was the net income? Assume that all dividends declared were actually paid.

Patterson Brothers recently reported an EBITDA of 7.5 million dollars and net income of 2.1 million dollars. It had 2.0 million dollars of interest expense, and its corporate tax rate was 30 percent. What was its charge for depreciation and amortization?

Harper Industries has $900 million of common equity on its balance sheet; its stock price is$80 per share; and its market value added (MVA) is $50 million. How many common shares are currently outstanding?

Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is$20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm’s EVA?

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.5 million and net plant and equipment equals$2 million. It has notes payable of $150,000, long-term debt of$750,000, and total common equity of $1.5 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet. a. What is the company’s total debt? b. What is the amount of total liabilities and equity that appears on the firm’s balance sheet? c. What is the balance of current assets on the firm’s balance sheet? d. What is the balance of current liabilities on the firm’s balance sheet? e. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm’s balance sheet.) f. What is the firm’s net working capital? g. What is the firm’s net operating working capital? h. What is the explanation for the difference in your answers to parts f and g?

Hampton Industries had $39,000 in cash at year-end 2015 and$11,000 in cash at year-end 2016. The firm invested in property, plant, and equipment totaling $210,000. Cash flow from financing activities totaled$120,000. a. What was the cash flow from operating activities? b. If accruals increased by $15,000, receivables and inventories increased by$50,000, and depreciation and amortization totaled $25,000, what was the firm’s net income?

Edmonds Industries is forecasting the following income statement: $$ \begin{matrix} \text{Sales} & \text{\$ 10.000.000}\\ \text{Operating costs excluding depreciation & amortization} & \text{5.500.000}\\ \text{EBITDA} & \text{\$ 4.500.000}\\ \text{Depreciation and amortization} & \text{1.200.000}\\ \text{EBIT} & \text{\$ 3.300.000}\\ \text{Interest} & \text{500.000}\\ \text{EBT} & \text{\$ 2.800.000}\\ \text{Taxes (40\\%)} & \text{1.120.000}\\ \text{Net income} & \text{\$ 1.680.000}\\ \end{matrix} $$ The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate$2.000.000 in net income?

Susan and Stan Britton are a married couple who file a joint income tax return, where the tax rates are based on the tax tables presented in the chapter. Assume that their taxable income this year was $375,000. a. What is their federal tax liability? b. What is their marginal tax rate? c. What is their average tax rate?

Patterson Brothers recently reported an EBITDA of $7.5 million and a net income of $2.625 million. It had $1.5 million of interest expense, and its corporate tax rate was 25%. What was its charge for depreciation and amortization?

a. $2,500,000

b. $2,750,000

c. $2,000,000

d. $1,500,000

Answer the following question.

Electronics World Inc. paid out 22.4 million dollars in total common dividends and reported 144.7 million dollars of retained earnings at year-end. The prior year's retained earnings were 95.5 million dollars. What was the net income? Assume that all dividends declared were actually paid.

Arlington Corporation’s financial statements (dollars and shares are in millions) are provided here. $$ \begin{matrix} \text{Balance Sheets as of December 31}\\ \text{ } & \text{2016} & \text{2015}\\ \text{Assets}\\ \text{Cash and equivalents} & \text{\$ 15.000} & \text{\$ 14.000}\\ \text{Accounts receivable} & \text{35.000} & \text{30.000}\\ \text{Inventories} & \text{33.320} & \text{27.000}\\ \text{Total current assets} & \text{\$ 83.320} & \text{\$ 71.000}\\ \text{Net plant and equipment} & \text{48.000} & \text{46.000}\\ \text{Total assets} & \text{\$ 131.320} & \text{\$ 117.000}\\ \text{Liabilities and Equity}\\ \text{Accounts payable} & \text{\$ 10.100} & \text{\$ 9.000}\\ \text{Accruals} & \text{8.000} & \text{6.000}\\ \text{Notes payable} & \text{7.000} & \text{5.050}\\ \text{Total current liabilities} & \text{\$ 25.100} & \text{\$ 20.050}\\ \text{Long-term bonds} & \text{20.000} & \text{20.000}\\ \text{Total liabilities} & \text{\$ 45.100} & \text{\$ 40.050}\\ \text{Common stack (4.000) shares)} & \text{40.000} & \text{40.000}\\ \text{Retained earnings} & \text{46.220} & \text{36.950}\\ \text{Common equity} & \text{\$ 86.220} & \text{\$ 76.950}\\ \text{Total liabilities and equity} & \text{\$ 131.320} & \text{\$ 117.000}\\ \end{matrix} $$ $$ \begin{matrix} \text{Income Statement for Year Ending December 31, 2016}\\ \text{Sales} & \text{\$ 210.000}\\ \text{Operating costs excluding depreciation and amortization} & \text{160.000}\\ \text{EBITDA} & \text{\$ 50.000}\\ \text{Depreciation & amortization} & \text{6.000}\\ \text{EBIT} & \text{\$44.000}\\ \text{Interest} & \text{5.350}\\ \text{EBT} & \text{\$ 38.650}\\ \text{Taxes (40\\%)} & \text{15.460}\\ \text{Net income} & \text{\$ 23.190}\\ \text{Dividends paid} & \text{\$ 13.920}\\ \end{matrix} $$ a. What was net operating working capital for 2015 and 2016? b. What was Arlington’s 2016 free cash flow? c. Construct Arlington’s 2016 statement of stockholders’ equity. d. What was Arlington’s 2016 EVA? Assume that its after-tax cost of capital is 10%. e. What was Arlington’s MVA at year-end 2016? Assume that its stock price at December 31, 2016, was $25.

Indicate whether the following instruments are examples of money market or capital market securities. a. U.S. Treasury bills. b. Long-term corporate bonds. c. Common stocks. d. Preferred stocks. e. Dealer commercial paper.

Financial information for Powell Panther Corporation is shown here $$ \begin{matrix} \text{Sales} & \text{\$ 1.200.0} & \text{\$ 1.000.0}\\ \text{Operating costs excluding depreciation and amortization} & \text{1.020.0} & \text{850.0}\\ \text{EBITDA} & \text{\$ 180.0} & \text{\$ 150.0}\\ \text{Depreciation & amortization} & \text{30.0} & \text{25.0}\\ \text{Earnings before interest and taxes (EBIT)} & \text{\$ 150.0} & \text{\$ 125.0}\\ \text{Interest} & \text{21.7} & \text{20.2}\\ \text{Earnings before taxes (EBT)} & \text{\$ 128.3} & \text{\$ 104.8}\\ \text{Taxes (40\\%)} & \text{51.3} & \text{41.9}\\ \text{Net income} & \text{\$ 77.0} & \text{\$ 62.9}\\ \end{matrix} $$ $$ \begin{matrix} \text{ } & \text{2016} & \text{2015}\\ \text{Assets} & \text{\$ 12.0} & \text{\$ 10.0}\\ \text{Cash and equivalents} & \text{180.0} & \text{150.0}\\ \text{Accounts receivable} & \text{180.0} & \text{200.0}\\ \text{Inventories} & \text{\$ 372.0} & \text{\$ 360.0}\\ \text{Total current assets} & \text{300.0} & \text{250.0}\\ \text{Net plant and equipment} & \text{\$ 672.0} & \text{\$ 610.0}\\ \text{Total assets} & \text{ } & \text{ }\\ \text{Liabilities and Equity} & \text{ } & \text{ }\\ \text{Accounts payable} & \text{\$ 108.0} & \text{\$ 90.0}\\ \text{Accruals} & \text{72.0} & \text{60.0}\\ \text{Notes payable} & \text{67.0} & \text{51.5}\\ \text{Total current liabilities} & \text{\$ 247.0} & \text{\$ 201.5}\\ \text{Long-term bonds} & \text{150.0} & \text{150.0}\\ \text{Total liabilities} & \text{\$ 397.0} & \text{\$ 351.5}\\ \text{Common stock (50 million shares)} & \text{50} & \text{50.0}\\ \text{Retained earnings} & \text{225.0} & \text{208.5}\\ \text{Common equity} & \text{\$275.0} & \text{\$ 258.5}\\ \text{Total liabilities and equity} & \text{\$ 672.0} & \text{\$ 610.0}\\ \end{matrix} $$ a. What was net operating working capital for 2015 and 2016? b. What was the 2016 free cash flow? c. How would you explain the large increase in 2016 dividends?