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Common Size Statements

See Attached.

Pamplin Inc. Balance Sheet at 12/31/2007 and 12/31/2008

ASSETS

2007 2008

Cash $ 200 $ 150
Accounts payable 450 425
Inventory 550 625
Current Assets $ 1200 $ 1200
Plant and equipment $ 2200 $ 2600
Less accumulated depreciation ( 1000 ) ( 1200)
Net plant and equipment $ 1,200 $ 1,400
Total Assets $ 2,400 $ 2,600

Liabilities and Owner's Equity

2007 2008
Accounts payable $ 200 $ 150
Notes payable- current ( 9% ) 0 150
Current liabilities $ 200 $ 300
Bonds $ 600 $ 600
Owners' equity
Common stock $ 900 $ 900
Retained earnings 700 800
Total owners' equity $ 1600 $ 1700
Total liabilities and owners' equity $ 2400 $ 2600

Pamplin Inc. Income Statement for Years ending 12/31/2007 and 12/31/2008

2007 2008
Sales $ 1200 $ 1450
Cost of goods sold 700 850
Gross profit $ 500 $ 600
Selling, general & admin. Expenses $ 30 $ 40
Depreciation 220 250 200 240
Operating income $ 250 $ 360
Interest expense $ 50 $ 64
Net income before taxes $ 200 $ 296
Taxes ( 40% ) 80 118
Net income $ 120 $ 178

Given the information for Pamplin Inc. for 2008:
A) Complete a common - sized income statement and a common - sized balance sheet.
B) Compute free cash flows and financing cash flows for the period.

Attachments

Solution Preview

Pamplin, Inc., Balance Sheet
ASSETS Common Size for 2008
2007 2008
Cash $200 $150 5.8% In common size, all items are shown
Accounts Receivable 450 425 16.3% as a percentage of total assets
Inventory 550 625 24.0%
Current assets 1,200 1,200 46.2%
Plant and equipment 2,200 2,600 100.0%
Less: accumulated depreciation (1,000) (1,200) -46.2%
Net plant and equipment 1,200 1,400 53.8%
Total assets 2,400 2,600 100.0%

LIABILITIES ...

Solution Summary

The solution explains how to prepare a common size income statement and a common size balance sheet. It also explains how to calculate the free cash flows and the financing cash flows

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