Reference no: EM132015602

Assignment 1

1. Tax Calculation

The firm C has taxable income 76000.

Taxable Income		Tax Rate
0	50000	0.15
50001	75000	0.25
75001	100000	0.34
100001	335000	0.39
335001	10000000	0.34

(1) Based on tax table above, please find marginal tax rate for firm

(2) According to tax table above, please calculate total tax of firm C and average tax rate for Firm c. (3 credits)

2. Balance sheet

The following statement is the balance sheet of firm A.

Balance Sheet of Firm A(units: million)
Current Asset:		Current Liabilities:
Cash and Equivalents	100	Accounts payable
Accounts Receivable		Total Current Liabilities	186
Inventory	78
Total Current Assets		Long Term Liabilities:
		Deferred Taxes
Fixed Assets:		Long Term debt	137
Property,Plant,and equipment		Total Long Term Liability	157

 

Less Accumulated Depreciation	420
Net Property,plant,and Equipment		Stockholders' Equity:
		Preferred Stock	39
Intangible Assests and Others	244	Common Stock	55
Total Fixed Assets	502	Capital Surplus	147
		Accumulated Retained Earnings	190
Total Assets		Less Treasury Stock	26
		Total Equity	405
		Total  Liabilities and Equity

(1) According accounting rules and accounting equation to fill red box .

(2) If firm A sells products whose value is 10 million and the value is not paid in cash. The firm A will get cash in the future. In this case, which item in the balance sheet will increase and which item in the balance sheet will decrease?

3. Financial Cash flow and statement of cash flows

Statement of Cash flows(units:million) Operation   Net income 192 Depreciation 76 Deferred Taxes 13 Change in Assets and liabilities

You are researching Time Manufacturing and have found the following accounting statement of cash flows for the most recent year. You also know that the company paid $84 million in current taxes and had an interest expense of $41 million.

Acccounts receivable	-16
Inventories	17
Accounts payable	13
Accrued Expenses	-7
Other	2
Total cash flow from operation	290
Investing activities
Acquisition of fixed assets	-198
Sale of fixed assets	21
Total cash flow from investing activities	-177
Financing Activities
Retirement of long-term debt	-150
proceeds from long-term debt sales	115
change in notes payable	8
Dividends	-81
Repurchase of stock	-11
Proceeds from long-term debt sales	43
Total cash flow from financing activities	-76
change in cash(balance sheet)	37

(1) Use information above :interest expenses, current tax and statement of cash flow to compute financial cash flow.

(hint: please first calculate cash flows from three parts and then sum them)

(2) Based on Statement of cash flow, please calculate the cash flow for shareholders and cash flow for debtholders. Based on Calculation, write down the equation about Cash flow for different stakeholders.