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Use the following for questions 7-9 Income Statement Year Balance Sheet as of December Ending December 31, 31 2011 2011 2010 Sales $20 Current Assets 15 12 Cost of goods sold 8 Total assets 82 76 Depreciation expense 4 Current Liabilities 12 10 Interest expense 2 Long-term debt 30 30 Taxable income 8 Total liabilities 42 40 Taxes 3 Common Stock 10 10 Net income $5 Retained earnings 10 16 Total Stockholder's equity 40 36 Dividends paid $1 Total liabilitiek and equity 8276 What is the ROE? Use averages where appropriate. Look at my notes. In finance, when combining an income statement item with a balance sheet item, you need to use the average of the balance sheet item. 1) 50% 2) 12.5% What is the ROE? Use averages where appropriate. Look at my notes. In finance, when combining an income statement item with a balance sheet item, you need to use the average of the balance sheet item. 1) 50% O2) 12,5% 3) 13.2% 4) 13.9% Question 8 (3 points) What is the change in working capital? Recall working capital is current assets minus current liabilities. You need to find the change from 2010 to 2011. 1) 1 (2) 2 Question 8 (3 points) What is the change in working capital? Recall working capital is current assets minus current liabilities. You need to find the change from 2010 to 2011. O 1) 1 0 2 2 3) 3 O4) 4 Question 9 (3 points) If capital expenditures were $2 in 2011, what is the FCFE? There was no debt issued or retired. Use FCFE - Net Income + depreciation - Cap. Expend. - change in working capital - principal debt repayments + new debt issues. 1) 4 25 Question 9 (3 points) If capital expenditures were $2 in 2011, what is the FCFE? There was no debt issued or retired. Use FCFE = Net Income + depreciation - Cap. Expend. - change in working capital - principal debt repayments + new debt issues. 14 2) 5 3) 6 29 4) 7

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