P4-6

REI
REI Balance Sheet for the Year Ended December 31, 2012
and 2011
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 1,500 $ 1,000
Short-term
Accountsinvestments
receivable, 1,800 1,200
less allowance for
doubtful accounts 2,000 1,800
Inventories 2,900 2,800
Total current assets 8,200 6,800

Gross fixed assets 29,500 28,100

Less: Accumulated depreciation 14,700 13,100
Net fixed assets 14,800 15,000
Total assets $ 23,000 $ 21,800

Liabilities and members’ equity

Current liabilities:
Accounts payable $ 1,600 $ 1,500
Notes payable 2,800 2,200
Accruals 200 300
Total current liabilities 4,600 4,000
Long-term debt 5,000 5,000
Total liabilities 9,600 9,000
Common stock 10,000 10,000
Retained earnings 3,400 2,800
Total members’ equity 13,400 12,800
Total liabilities and members’ $ 23,000 $ 21,800

Depreciation $ 1,600

Earnings before interest and taxes (EB $ 2,700

Interest expense $ 367

Tax rate 40%

NOPAT $ 1,620

OCF $ 3,220

NFAI $ 1,400

NCAI $ 1,800

FCF $ 20
In Class 4-11 Problem
Tennset Inc.
Sales ### ### ### ### ###
Purchases ### ### ### ### $80,000

SeptempberOctober NovemberDecember January

Forecast sales ### ### ### ### ###
Cash sales 34,000 32,000 28,000
Collections
Lag 1 month 100,000 68,000 64,000
Lag 2 months 84,000 100,000 68,000
Other receipts - - 15,000
Total cash receipts 218,000 200,000 175,000

Forecast purchases ### ### ### ### $80,000

Cash purchases 14,000 10,000 8,000
Payments
Lag 1 month 75,000 70,000 50,000
Lag 2 months 48,000 60,000 56,000
Salaries & wages 50,000 34,000 32,000
Rent 20,000 20,000 20,000
Interest payments - - 10,000
Principal payments - - -
Dividends - - 20,000
Taxes - - -
Purchases of fixed assets - 25,000 -
Total cash disbursements 207,000 219,000 196,000

Total cash receipts 218,000 200,000 175,000

Less: Total cash disbursements 207,000 219,000 196,000
Net cash flow 11,000 (19,000) (21,000)
Add: Beginning cash 22,000 33,000 14,000
Ending Cash 33,000 14,000 (7,000)
Less: Minimum cash balance 15,000 15,000 15,000
Required total financing $ (1,000) ###
Excess cash balance 18,000
180,000 20,000 250,000
110,000 100,000 90,000

February March April

### $20,000 ###
36,000 4,000 50,000

56,000 72,000 8,000

64,000 56,000 72,000
27,000 15,000 12,000
183,000 147,000 142,000

### ### $90,000

11,000 10,000 9,000

40,000 55,000 50,000

40,000 32,000 44,000
28,000 36,000 4,000
20,000 20,000 20,000
- - 10,000
- - 30,000
- - 20,000
- - 80,000
- - -
139,000 153,000 267,000

183,000 147,000 142,000

139,000 153,000 267,000
44,000 (6,000) ###
(7,000) 37,000 31,000
37,000 31,000 (94,000)
15,000 15,000 15,000
 ###
22,000 16,000