Agricultural Case

CORPORATE FINANCE (BPMM 6053)

TAKE HOME ASSIGNMENT

CHAPTER 2

QUESTION 11 (PAGE 37)

Cash Flows. Ritter Corporation's accountants prepared the following financial statements for

year-end 2010.

a. Explain the change in cash during the year 2010.

The cash was increase from 2009 to 2010 from $ 35 to $ 50. This is due to

b. Determine the change in net working capital in 2010.

Net working capital 2009 = Current Assets – Current Liabilities

= ( 35 + 140 ) – 95

= $ 80

Net working capital 2010 = Current Assets – Current Liabilities

= ( 50 + 155 ) – 85

= $ 120

According to the Balance Sheets, it shows that the company has increased the Net working capital on 2010. Both year, the Current Assets are greater than Current Liabilities and it turns the Net working capital to positive. And on 2010 the liabilities was reduce which will increase the NWC.

c. Determine the cash flow generated by the firm's assets during the year 2010.

CHAPTER 2

QUESTION 19 (PAGE 38)

Net Income and OCF. During 2010, Raines Umbrella Corp. had sales of $740,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $105,000, and respectively. In addition, the company had an interest expense of $70,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions).

a. What is Raine's net income for 2010?

Income Statement

Sales 740,000

Cost of goods sold 610,000

Other expenses 105,000

Depreciation 140,000

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EBIT – 115,000

Interest 70,000

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Taxable income – $175,000

Taxes (35%) 0 0

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Net