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Financial Statements and Cash Flow

Essay by   •  May 3, 2019  •  Essay  •  443 Words (2 Pages)  •  621 Views

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Income Statement ($ millions)

2018

2019

Sales

1,509

1,250

COGS

750

550

Depreciation

65

50

Non-Operating Expense

30

40

EBIT

664

610

Interest Expense

40

40

EBT

624

570

Tax

212

194

Net Income

412

376

Dividends

103

67

Balance Sheet ($ millions)

2018

2019

Cash

104

160

A/R

455

688

Inventory

553

555

    Current Assets

1,112

1,403

Fixed Assets (net of depreciation)

1,644

1,709

        Total Assets

2,756

3,112

A/P

400

300

Accuruals

28

89

Notes Payable

50

42

    Total Current Liabilities

478

431

Long-Term Debt

358

412

Total Liabilities

836

843

Equity

600

640

Retained Earnings

1,320

1,629

         Total Liabilities and Equity

2,756

3,112

Change in Net Fixed Assets = 1,709 – 1,644 = 65

Change in Gross Fixed Assets (Capital Expenditures) = 1,709 – 1,644 + 50 = 115*

*To get the change in gross fixed assets, we must add back depreciation to the change in net fixed assets since the annual depreciation was deducted to get to net fixed assets.

Change in NOWC = (688 + 555 – 300 – 89) - (455 + 553 – 400 – 28) = 274*

*I have left out cash as a current asset since we will be adding the cash to the present value of the operating assets when using the free cash flow approach.  I have also left out notes payable, a current liability, since we will be subtracting the debt from the value of the firm when using the free cash flow approach.

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