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Bryan T. Lluisma Fin3 BSA-4 TTH 5-6:30pm

The document contains financial information for Rattner Robotics and asks several questions: 1) Rattner Robotics' net income was $2.4 million. 2) Its net operating working capital was $10 million. 3) Its net working capital was $8 million. 4) Given information provided, Rattner Robotics' free cash flow for the year was $0 as its capital expenditures equaled its operating cash flow. 5) Rattner Robotics' year-end Statement of Stockholders' Equity showed common stock of $5 million and retained earnings of $10.8 million, for total stockholders' equity of $15.8 million.

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493 views3 pages

Bryan T. Lluisma Fin3 BSA-4 TTH 5-6:30pm

The document contains financial information for Rattner Robotics and asks several questions: 1) Rattner Robotics' net income was $2.4 million. 2) Its net operating working capital was $10 million. 3) Its net working capital was $8 million. 4) Given information provided, Rattner Robotics' free cash flow for the year was $0 as its capital expenditures equaled its operating cash flow. 5) Rattner Robotics' year-end Statement of Stockholders' Equity showed common stock of $5 million and retained earnings of $10.8 million, for total stockholders' equity of $15.8 million.

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Bryan Lluisma
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Bryan T.

Lluisma Fin3
BSA-4 TTH 5-6:30pm

1. Last year Rattner Robotics had $5 million of operating income. Its depreciation
expense was $1 million, its interest expense was $1 million, and its corporate tax rate
was 40%. At year-end, it had $14 million in current asset, $3 million in accounts
payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant
and equipment. Rattner had no other current liabilities. Assume that Rattner's only
noncash item was depreciation.

a. What was the company's net income?

b. What was its net operating working capitals (NOWC)?

c. What was its net working capital (NWC)?

d. Rattner had $12 million in net plant and equipment the prior year. Its net operating
working capital has remained constant over time. What is the company's free cash flow
(FCF) for the year that just ended?

e. Rattner had 500,000 common shares outstanding and the common stock amount on
the balance sheet is $5 million. The company has not issued or repurchased common
stock during last years. Last year's balance in retained earnings was $12 million and the
firm paid out dividends of $1.2 million during the year. Develop Rattner's end-of-year
Statement of Stockholders Equity.

a. What was the company's net income?

Company's net income = (operating income - interest expense) x (1-tax rate)

(5 -1) x (1-40%)

Company's net income = $ 2.40 Million

b. What was its net operating working capitals (NOWC)?

Net operating working capitals = current asset - accounts payable - accruals

14 - 3 - 1

Net operating working capitals = $ 10 Million


c. What was its net working capital (NWC)?

Net working capital = current asset - Current liability

14 - (3 + 1 + 2)

Net working capital = $ 8 Million

d. Plant and equipment - prior year12NOWC has remained constant over time.What is
the company's free cash flow (FCF) for the year that just ended?

Free Cash Flow 5 MIL x .6

FCF = EBIT (1-T) + DEP. – CAPITAL EXPENDITURES

=3+1–4

= 0 NO CASH FLOW

e. Rattner had 500,000 common shares outstanding and the common stock amount on
the balance sheet is $5 million. The company has not issued or repurchased common
stock during last years. Last year's balance in retained earnings was $12 million and the
firm paid out dividends of $1.2 million during the year. Develop Rattner's end-of-year
Statement of StockHolders Equity.

End of Year Statement of Stockholders Equity

Particulars

Common Stock 5,000,000.00

Retained
10,800,000.00
earnings

Total Stockholders’
15,800,000.00
Equity

Retained earnings =last years earnings-dividend paid


12,000,000.00-1,200,000.00=10,800,000.00

2. In its most recent financial statements, Newhouse Inc. reported $50 million of net
income and$810 million of retained earnings. The previous retained earnings were $780
million. How muchin dividends was paid to shareholders during the year?
Beginning Retained Earnings = $780,000,000
Net Inc. = $50,000,000
50 +780 - x = 810
830 - X =810
Sub "830" from both sides and: x = 20
Shareholders were paid $20 Million in dividends.

1. 810-780= 30
2. 50-30= 20
3. $20 mill were paid out in dividends.

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