A. Use the statements provided in a separate Excel file, Test Company

| June 3, 2016

Question

A. Use the statements provided in a separate Excel file, Test Company.xls, to determine the following. Be sure to show your work.

1) The total dollar investment in assets made during 2004 and the sources of the funds
invested.
2) The company’s earnings per share (EPS) in 2003 and 2004.
3) The total dividends paid and dividends per share (DPS) in 2003 and 2004.
4) The average amount the company received from the sale of all common shares outstanding
in 2003 and those sold in 2004.
5) Retained earnings as of the beginning of the 2003 fiscal year.
6) Test Company’s book value and book value per share at the end of the 2003 and 2004
fiscal years.

B. Prepare a statement of cash flows for Sample Company for the 2004 fiscal year and interpret the statement.

Sample CompanyBalance SheetsAs at August 31 (in $000)2003Current Assets:CashAccounts receivableInventoryPrepaid expensesTotal current assetsInvestmentsFixed Assets:LandBuildingsFurniture and fixturesFixed assets, costLess: accumulated amortizationTotal fixed assets (net)Total AssetsLiabilities & EquityCurrent liabilities:Accounts payableLine of creditIncome taxes payableCurrent ptn of LTDTotal current liabilitiesBank loan (due December 31, 2010)Other long-term loansTotal liabilitiesEquityPreferred sharesCommon sharesRetained earningsTotal equityTotal Liabilities & Equity
2004
$1.209.21,148.105.31,163.8044
$1.3043.21,155.4061,205.90529.7
25.525.5374591.161.9158.5461.4775.1167.2221294.2554.1$1,502.00 $2,289.70
$379.80133123.79.9646.40152.8799.2
$223.70192.72.576494.9310.6727.71,533.20
67.482.442.652.6592.8621.5702.8756.5$1,502.00 $2,289.70
Sample CompanyIncome StatementsFor Years Ending August 31 (in $000)2003SalesCost of goods soldGross marginOperating expenses:Salaries and benefitsAdministrative expensesAdvertisingAmortizationTotal operating expensesOperating earnings (EBIT)Less: interest expenseEarnings before taxIncome taxesNIAT
2004
$1,721.50 $1,982.80774945.6947.5 1,037.20384.198.6111.444.6638.7308.834.827468.4$205.60
467.2119.2139.453.8779.6257.6152.1105.526.4$79.10
1) In 2003, the company had 12,000 preferred shares and 122,300 common shares outstanding. In 2004, Sample Company sold1,500 preferred and 800 common shares. The company pays a dividend of $1 per share on the preferred shares. In 2003, SampleCompany paid common share dividends of $36,690.
2) Sample Company is a CCPC and is a manufacturer. The amount of CCA the company could claim in 2003 and 2004 was$36,120 and $71,485 respectively.

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