Finance and Value Creation

Finance and Value Creation

Problem One

  1. 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

  1. 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

  1. 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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