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YOU MUST SHOW ALL CALCULATIONS TO EARN CREDIT.

2016 2017

BALANCE SHEETS:

Assets:

Cash 120,000 160,000

Accounts Receivable 520,000 620,000

Inventory 305,000 290,000

Fixed Assets, net 410,000 510,000

Total Assets 1,355,000 1,580,000

Liabilities and Equity:

Accounts Payable 350,000 $375,000

Long-term Debt 500,000 625,000

Common Stock 50,000 75,000

Retained Earnings 455,000 505,000

Total Liabilities and Equity 1,355,000 1,580,000

INCOME STATEMENT:

Revenue 3,500,000

Cost of Goods Sold 2,275,000

General and Administrative 515,000

Depreciation Expense 120,000

Earnings Before Interest and Taxes 590,000

Interest Expense 40,000

Pretax Net Income 550,000

Income Taxes 167,000

Net Income 383,000

1. What was Gannons Operating Cash Flow (OCF) in 2017?
2. What was Gannons investment in net working capital for 2017?
3. What was Gannons Cash Flow to Creditors in 2017?
4. What was Gannons Cash Flow to Stockholders in 2017?

For questions #19-20, assume that a corporations pretax net income is taxable (Federal + State) based on 21% of the first $300,000, 30% of the next $400,000, and 34% of anything beyond that.

YOU MUST SHOW ALL CALCULATIONS TO EARN CREDIT:

5. If the company made $1,000,000, what is the corporations average tax rate?
6. If the company made $800,000, what is the corporations marginal tax rate?

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