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Calculating Owners' Equity, Net Working Capital, Fixed Assets, Long Term Debt, and Cash Flow to Creditors

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Consider the following abbreviated financial statements for Parrothead Enterprises:

PARROTHEAD ENTERPRISES
2010 and 2011 Partial Balance Sheets
Assets Liabilities and Owners' Equity
2010 2011 2010 2011
Current assets $ 954 $ 1,024 Current liabilities $ 390 $ 419
Net fixed assets 3,857 4,616 Long-term debt 2,041 2,217

PARROTHEAD ENTERPRISES
2011 Income Statement
Sales $ 12,720
Costs 6,060
Depreciation 1,080
Interest paid 200

a. What is owners' equity for 2010 and 2011?

Owners' equity 2010 $
Owners' equity 2011 $

b. What is the change in net working capital for 2011?

Change in NWC $

c-1
In 2011, Parrothead Enterprises purchased $1,895 in new fixed assets. How much in fixed assets did Parrothead Enterprises sell?

Fixed assets sold $

c-2
In 2011, Parrothead Enterprises purchased $1,895 in new fixed assets. What is the cash flow from assets for the year? (The tax rate is 35 percent.)

Cash flow from assets $

d-1
During 2011, Parrothead Enterprises raised $410 in new long-term debt. How much long-term debt must Parrothead Enterprises have paid off during the year?

Debt retired $

d-2
During 2011, Parrothead Enterprises raised $410 in new long-term debt. What is the cash flow to creditors?

Cash flow to creditors $

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Solution Preview

a.
Total assets 2010 = $954 + 3,857 = $4,811
Total liabilities 2010 = $390 + 2,041 = $2,431
Owners' equity 2010 = $4,811 - 2,431 = $2,380

Total assets 2011 = $1,024 + 4,616 = $5,640
Total liabilities 2011 = $419 + 2,217 = $2,636
Owners' equity 2011 = $5,640 - 2,636 = $3,004

b.
NWC 2010 = CA10 - CL10 = ...

Solution Summary

The following problem helps calculate owner's equity, net working capital, fixed assets, long-term debt and cash flow to creditors.

$2.19
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