Group 5:
Leader: Olac, Ezekiel B. BSA-C06
Members: Baling, Kimberly C.
Elbanbuena, Danielle J.
Juguan, Ma. Nenita P.
Trejeros, Angeline L.
FINMGT30
Activity 3:
Part I
Direct Method
Operating Activities:
Cash receipts from:
Customers $ 6, 140, 000
Cash paid for:
Merchandise: (5, 150,000)
Operating Expenses (880,000)
Interest Expense (20,000)
Income tax (102,000)
Net cash provided by operating Activities $
(12,000)
Investing Activities:
Long term investment $ (20,000)
Purchase of Property, land and equipment (530,000)
Net cash used in Investing activities $
(550,000)
Financing activities:
Notes Payable $ 500,000
Stocks 300,000
Dividend Paid (38,000)
Net cash provided by operating Activities $
762, 000
Net Increase in Cash $
200,000
Cash and equivalents at the beginning of the year
150,000
Cash and equivalents at the end of the year $
350, 000
Indirect Method
Cash flows from Operating Activities
Net Income $ 238, 000
Add: Non-cash assets
Depreciation 60, 000
Changes in working Capital
Increase in Inventory (240, 000)
Decrease in Prepaid Expenses 50,000
Increase in Receivables ( 260, 000)
Increase in Accrued Expense. 10,000
Increase in Interest Payable. 40,000
Increase in Payable 90, 000
Net Operating Activities $
(12, 000)
Cash flows from Investing Activities
Purchase of Plant, property and Equipment (530, 000)
Increase in Long term investment (20, 000)
Net Investing Activities $
(550, 000)
Cash flows from financing Activities
Increase in Notes payable 500, 000
Increase in Stocks 300, 000
Dividend Paid (38, 000)
Net Financing Activities $ 762,
000
Net Increase in Cash 200, 000
Cash balance, 2023 350,
000
Cash balance, 2022 (150,
000)
Increase in Cash $ 200,
000
Part 2
3-1
a.) What is the company’s total debt?
Total Assets $ 2, 500, 000
Less:
Notes Payable 150, 000
Long term borrowings 750, 000
Equity 1, 500, 000
Increase in Liabilities 100, 000
Notes Payable 150, 000
Long term Borrowings 750, 000
Increase in Liabilities 100, 000
Total Debt 1, 000, 00
b.) What is the amount of total liabilities and equity that appears on
the firm’s balance sheet?
Total Liabilities 1, 000, 000
Total Equity 1, 500, 000
Total Liabilities and Equity 2, 500, 000
c.)What is the balance of current liabilities on the firm’s balance sheet?
Current assets $
2,500,000
Non-current Assets (plant & equipment) (2,000,000)
Current Assets $
500,000
d.) What is the balance of current liabilities on the firm’s balance
sheet?
Liabilities $1,000,000
Long-term Debt- 750,000
Total Current Liabilities $250,000
e.) What is the amount of Accounts Payable and Accruals on
itsbalance sheet? [Hint: Consider this as a single line item on
thefirm’s balance sheet]
Accounts Payable and Accruals
Trade & other Payables = P 100, 000
f.) What is the firm’s net working capital?
Current assets $500,000
Current liabilities 250,000
Networking capital $250,000
g.) How much is the firm’s Net Operating Working Capital?
Current Asset – Non-interest-bearing current liabilities
500, 000 - 100, 000 = P 400, 000
h.) What is the explanation for the difference in your answers to
parts f & g?
- Net working capital (NWC) is the difference between the total
current assets and total liabilities of a business. On the other hand,
the Net operating working capital (NOWC) is one measurement of a
company’s financial health. It looks at how efficiently a company is
managing its current assets and liabilities. Unlike net working
capital, it excludes cash and cash equivalents, since they are not
tied up in operations.
3-13
Basel Industries
Statement of Cash Flows
For the year ended
Operating Income
Net Income 5, 000, 000
Add:
Depreciation Expense 450, 000
Total operating activities 5, 450,
000
Investing Activities
Property, plant, and equipment (5, 500,
000)
Total Investing Activities (5, 500,
000)
Financing Activities
Long - term debt issued
1,000,000
Dividends paid to common shareholders
(750,000)
Total Financing Activities
250,000
Net Changes in Cash Balance
Net cash flow from operating activities 5, 450, 000
Net cash flow from investing activities (5, 500, 000)
Net cash flow from financing activities 250, 000
Net changes in cash flow from 200, 000
End of the year cash balance
Beginning cash balance 100, 000
Net cash from operating activities 5, 450, 000
Net cash from investing activities (5, 500, 000)
Net cash from financing activities 250, 000
End of the year cash balance 350, 000
3-14
a.) 2015 2014
Current Assets $ 72, 125 $ 59,
000
Non- interest Bearing CL (18,400)
(15, 000)
NOWS (Net operating working capital) $ 53, 725
$ 44, 000
b.)
OCF
= $ 39, 000 (60%) + $ 5, 000
= $ 28, 400
Capital Expenditure
= ($50,000- 47,000) + 5,000
= $8, 000
Nowc = $ 53, 725 – 44, 000
= $ 9, 725
FCF = $ 28, 400 – (8, 000 + 9, 725)
= 28, 400 – 17, 725
= $ 10, 675
c.)
Bailey Corporation
Statement of Stockholders Equity
For the year ended December 31, 2025
Total Shareholder’s Equity, Jan. 1, 2025 $ 50,
000
Shares issued during the year ( 20, 850)
Total Investment $
70, 000
Net incom
Less: Dividends declared and paid
(11, 175)
Total Shareholder’s Equity December 31, 2015
$32, 025
d.)
EVA = $ 23, 400 – (0.10) ( $ 82, 025)
$ 23, 400 – 8, 202.50
= $ 15, 197.50e)
MVA = ( 5, 000 x $ 20) - $ 50, 000
= $ 100, 000 - $ 50, 000
= $ 50, 00
3-15
Hermann Industries
Sales 12, 681, 481. 48
O.C Excluding Dep and Amort. (6, 974, 814. 81)
Earnings before interest, tax, dep, and amort. 5, 706, 666. 67
Depreciation and Amort. (880, 000)
4, 826, 666.67
Interest (660, 000)
4, 166, 666.67
Tax (40%) (1, 666, 666.67)
Net Income 2, 500, 000
