Michael Smith

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Purpose of Assignment

Provide students with a basic understanding of financial management, goal of the firm, and the basic financial statements. Students should be able to calculate and analyze solvency, liquidity, profitability and market value ratios, and create proforma financial statements.

Assignment Steps

Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft®Office website. There are also additional tutorials via the web that offer support for office products.

Complete the following Questions and Problems (Concepts and Critical Thinking Questions for Ch. 1 Only) from each chapter as indicated.

—-SHOW ALL WORK AND ANALYSIS—-

Prepare in Microsoft® Excel® or Word.

  • Ch. 1: Questions 3 & 11 (Concepts Review and Critical Thinking Questions section)
  • Ch. 2: Questions 4 & 9 (Questions and Problems section): Microsoft® Excel® template provided for Problem 4.
  • Ch. 3: Questions 4 & 7 (Question and Problems section)
  • Ch. 4: Questions 1 & 6 (Questions and Problems section): Microsoft® Excel® template provided for Problem 6.

Format your assignment consistent with APA guidelines if submitting in Microsoft® Word.

Chapter 2

Chapter 2
Problems 2, 3, 4, 6, 7, 14, 15, 19
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the “Analysis ToolPak” or “Solver Add-In” be installed in Excel.
To install these, click on the Office button
then “Excel Options,” “Add-Ins” and select
“Go.” Check “Analyis ToolPak” and
“Solver Add-In,” then click “OK.”

#4

Chapter 2
Question 4
Input area:
Sales
Costs
Depreciation expense
Interest expense
Tax rate
Cash dividends
Shares outstanding
Output area:
Income Statement
Sales $ – 0
Costs –
Depreciation expense – 0
EBIT $ –
Interest expense –
EBT $ – 0
Taxes (0%) –
Net income $ – 0
Addition to retained earnings $ – 0
Earnings per share ERROR:#DIV/0!
Dividends per share ERROR:#DIV/0!

#6

Chapter 2
Question 6
Input area:
Taxable income
Taxable income
0 – 50,000 15%
50,001 – 75,000 25%
75,001 – 100,000 34%
100,001 – 335,000 39%
335,001 – 10,000,000 34%
10,000,001 – 15,000,000 35%
15,000,001 – 18,333,333 38%
18,333,334 + 35%
Output area:
Taxes:
15% $ 50,000
25% (50,000)
34% 0
39% 0
34% 0
35% 0
38% 0
35% 0
The marginal tax rate is 15%

#7

Chapter 2
Question 7
Input area:
Sales
Costs
Depreciation Expense
Interest Expense
Tax rate
Output area:
Income Statement
Sales $ – 0
Costs –
Depreciation expense – 0
EBIT $ –
Interest expense –
EBT $ – 0
Taxes (0%) –
Net income $ – 0
Operating cash flow $ – 0

#14

Chapter 2
Question 14
Input area:
Sales
Costs
Other expenses
Depreciation expense
Interest expense
Taxes
Dividends
2015 New equity
Net new long-term debt
Change in fixed assets
Output area:
Income Statement
Sales $ – 0
Costs –
Other expenses – 0
Depreciation expense – 0
EBIT $ –
Interest expense –
EBT $ – 0
Taxes –
Net income $ – 0
Dividends $ – 0
Addition to retained earnings $ – 0
a. Operating cash flow $ – 0
b. Cash flow to creditors $ – 0
c. Cash flow to stockholders $ – 0
d. Cash flow from assets $ – 0
Net capital spending $ –
Change in NWC $ – 0

#15

Chapter 2
Question 15
Input area:
Sales
Costs
Addition to retained earnings
Dividends paid
Interest expense
Tax rate
Output area:
Income Statement
Sales $ – 0
Costs –
Depreciation expense $ – 0
EBIT $ –
Interest expense –
EBT $ – 0
Taxes – 0
Net income $ – 0
Dividends $ – 0
Addition to retained earnings $ – 0

#19

Chapter 2
Question 19
Input area:
Sales
Costs
Administrative and selling expenses
Depreciation expense
Interest expense
Tax rate
Output area:
Income Statement
Sales $ – 0
Costs –
Administrative and selling expenses –
Depreciation expense – 0
EBIT $ –
Interest expense –
EBT $ – 0
Taxes (0%) 0
a. Net income $ – 0
b. Operating cash flow $ – 0
c. Net income was negative because of the tax deductibility and
interest expense. However, the actual cash flow from operations
was positive because depreciation is a non-cash expense and
interest is a financing expense, not an operating.
 
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