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Complete the following assignment in an Excel document – use a new sheet in Excel for each question.


Submit the complete document prior to the due date via Blackboard. Late submissions will be
penalized by 20% per day.


Part A: Calculating Operating Cash Flows and Net Working Capital

  1. Create an Income Statement.
    Tally Corp has the following information for 2014:
    Sales – $235,000
    Cost – $141,000
    Other Expenses – $7,900
    Depreciation Expense – $17,300
    Interest Expense – $12,900
    Taxes – $19,565
    Dividends – $12,300
    2014 New Equity – $6,100
    Net New Long-term Debt – $(4,500)
    Change in Fixed Assets – $25,000
  2. Answer the following questions:
  3. What is the 2014 Operating Cash Flow?
  4. What is the 2014 Cash Flow to Creditors?
  5. What is the 2014 Cash Flow to Stockholders?
  6. If Net Fixed Assets increased by $25,000 during the year what is the addition to NWC?

Part B: Standardized Financial Statements and Ratios

Tomson Corporation
2013 and 2014 Statement of Financial Position
Assets Liabilities
2013 2014 2013 2014
Current Assets Current Liabilities
Cash $ 8,436 $ 10,157 A/P $ 43,050 $ 46,821
A/R 21,530 23,406 Notes Payable 18,384 17,382
Inventory 38,760 42,650
Total $ 68,726 $ 76,213 Total $ 61,434 $ 64,203

Long-term Debt $ 25,000 $ 32,000

Owner’s Equity

Common Stock &
Paid-in Surplus

$ 40,000

$ 40,000
Retained Earnings 168,998 188,316

Net Plant & Equip $ 226,706 $ 248,306 Total $ 208,998 $ 228,316

Total Assets

$ 295,432

$ 324,519
Total Liabilities &
Owners Equity

$ 295,432

$ 324,519

  1. Prepare:

The 2014 combined common-size, common-base year statement of financial position for Tomson. Round your intermediate calculations to 2 decimal places and final answers to 4 decimal places.

  1. Calculate:
  2. The current ratio for each year
  3. The quick ratio for each year
  4. The cash ratio for each year
  5. The NWC to total assets ratio for each year
  6. The debt-equity ratio and the equity multiplier for each year
  7. The total debt ratio and the long-term debt ratio for each year

Round all answers to 2 decimal places.

Part C: Pro Forma Statements and EFN

Consider the following simplified financial statements for Turnbull Inc. – assuming no income taxes.
The company has predicted a sales increase of 15 percent. Assume that Turnbull Inc. pays out half of its
net income in the form of a cash dividend. Cost and assets vary with sales, but debt and equity do not.

Balance Sheet

Assets Liabilities
Assets $ 25,300 Debt $ 5,800
Equity $ 19,500
Total $ 25,300 Total $ 25,300

Income Statement
Sales $ 32,000
Costs 24,400
Net Income $ 7,600

Sales Increase 15%
Payout rate 50%

  1. Prepare the Pro Forma Statements for Turnbull Inc.
  2. Determine the EFN