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    Cash flow statement, financial statement & break-even point

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    Statement of Cash Flows
    Southwestern Rentals, Inc., rents equipment to customers ranging from homeowners to large construction companies. The financial information shown below was gathered from its accounting records for 2006. Assume any increase or decrease in the balances from 1/1/06 to 12/31/06 resulted from either receiving or paying cash in the transaction. For example, during 2006 the balance on loans for land holdings increased $150,000 because the company received $150,000 in cash by taking out an additional loan on the land.
    Balance as of Balance as of
    Items 1/1/06 12/31/06
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,000 $ 50,000
    Cash receipts from customers . . . . . . . . . . . . . . . . . . . . ? 600,000
    Loans on land holdings . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 250,000
    Cash distributions to owners . . . . . . . . . . . . . . . . . . . . . ? 150,000
    Loan on building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 70,000
    Investments in securities . . . . . . . . . . . . . . . . . . . . . . . . 850,000 1,050,000
    Cash payments for other expenses . . . . . . . . . . . . . . . . ? 50,000
    Cash payments for taxes . . . . . . . . . . . . . . . . . . . . . . . . ? 55,000
    Cash payments for operating expenses . . . . . . . . . . . . . ? 135,000
    Cash payments for wages and salaries . . . . . . . . . . . . . ? 100,000
    Required:
    1. Prepare a statement of cash flows for Southwestern Rentals, Inc., for the year ended December 31, 2006.
    2. Does Southwestern Rentals, Inc. appear to be in good shape from a cash flow standpoint? What other information would help you analyze the situation?

    Financial Statements. As you can see, someone has spilled ink over some of the entries in the balance sheet and income statement of Transylvania Railroad. Can you use the following information to work out the missing entries:

    long-term debt ratio 0.4
    times interest earned 8.0
    current ratio 1.4
    quick ratio 1.0
    cash ratio 0.2
    ROA 18%
    ROE 41%
    inventory turnover 5.0
    average collection period 71.2 days

    INCOME STATEMENT (in millions)
    net sales ???
    cost of goods sold ???
    SGA expenses 10
    depreciation 20
    EBIT ???
    interest expense ???
    EBT ???
    Tax ???
    net income???

    BALANCE SHEET (in millions)
    assets this year last year
    cash & marketable securities ??? 20
    receivables ??? 34
    inventories ??? 26
    total current assets ??? 80
    net property, plant, & equipment ??? 25
    Total assets ??? 105
    liabilities & shareholders equity
    accounts payable 25 20
    notes payable 30 35
    total current liabilities ??? 55
    long-term debt ??? 20
    shareholders equity ??? 30
    Total liabilities & shareholders 115 105

    Break-Even Analysis
    Jane Tamlyn paid $225 to rent a carnival booth for four days. She has to decide whether to sell doughnuts or popcorn. Doughnuts cost $1.80 per dozen and can be sold for $3.60 per dozen. Popcorn will require a $113 rental fee for the popcorn maker and $0.08 per bag of popcorn for the popcorn, butter, salt, and bags; a bag of popcorn could sell for $0.45.

    Required:
    1.Compute the break-even point in dozens of doughnuts if Jane decides to sell doughnuts exclusively and the break-even point in bags of popcorn if she decides to sell popcorn exclusively.
    2.Jane estimates that she can sell either 75 doughnuts or 45 bags of popcorn every hour the carnival is open (10 hours a day for four days). Which product should she sell?
    3.Jane can sell back to the baker at half cost any doughnuts she fails to sell at the carnival. Unused popcorn must be thrown away. If Jane sells only 70% of her original estimate, which product should she sell? (Assume that she bought or produced just enough to satisfy the demands she originally estimated.)

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    Excel file contains a cash flow statement, financial statement and a break-even point analysis.

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