Finance and Value Creation
Finance and Value Creation
Problem One
- Value of Jones Incorporated Stockholder’s Equity
Stock holders’ equity = Total Assets – Total liabilities
Jones, Incorporated total assets = Net fixed assets + net current assets
= $22, 500 + $8, 200
=$30, 700
Total liabilities = current liabilities + long-term liabilities
= $6, 400 + $12, 500
= $18, 900
Stock holders’ equity = $ 30, 700 – $18, 900
= $18, 800
- Value Of Jones Incorporated Networking Capital
Net working capital = current assets – current liabilities
Jones, Incorporated current assets = $8, 200
Jones, Incorporated total current liabilities = $6, 400
Jones, Incorporated net working capital = $8, 200 – $6, 400 = $1, 800
Problem Two
- Tanner Incorporated Net income
| Tanner Incorporated | |
| Income statement | |
| Sales | $863,000 |
| cost of sales | $407,000 |
| gross profit | $456,000 |
| depreciation expenses | $58,000 |
| Interest expense | $23,600 |
| net income before tax | $374,400 |
| Tax (35%) | $131,040 |
| Net income After tax | $243,360 |
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