# 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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