2007 Current assets Cash and equivalents Accounts receivable
�������� 2007 Current assets: Cash and equivalents Accounts receivable Inventories Other Total current assets $140 294 269 58 $761 2006 $107 270 280 50 $707 Fixed assets: Property, plant, and equipment $1, 423 $1, 274 Less accumulated depreciation (550) (460) Net property, plant, and equipment 873 814 Intangible assets and other 245 221 Total fixed assets $1, 118 $1, 035 Total assets $1, 879 $1, 742 ������� 2007 2006 Current Liabilities: ������� Accounts payable $213 $197 Notes payable 50 53 �� ������� Accrued expenses 223 205 Total current liabilities $486 $455 ����� Long-term liabilities: ����� Deferred taxes Long-term debt Total long-term liabilities $117 471 $588 $104 458 $562 ���� , ���������� Stockholder's equity: Preferred stock $39 ������� –������ , Common stock ($1 per value) 55 32 Capital surplus 347 � 327 ������ –����� ��. �. Accumulated retained earnings 390 347 Less treasury stock (26) (20) Total equity $805 $725 Total liabilities and stockholder's equity $1, 879 $1, 742
������ –������� Total operating revenues �����Cost of goods sold Selling, general, and administrative expenses ������ Depreciation ���� Operating income ������ Other income Earnings before interest and taxes ������� expense ����� Interest Pretax income ������� Taxes Current: $71 ���� Deferred: $13 ������� Net income Addition to retained earnings Dividends: $2, 262 1, 655 327 90 $190 29 $219 49 $170 84 $86 $43
������ –������� Total operating revenues ��� –����� Cost of goods sold Selling, general, and administrative expenses (����� ) Depreciation �������� Operating income ������ �� Other income Earnings before interest and taxes ������� , expense ������� �� ���� Interest Pretax income ������� Taxes Current: $71 ������� Deferred: $13 ������� Net income Addition to retained earnings: Dividends: $2, 262 1, 655 327 90 $190 29 $219 49 $170 84 $86 $43
������ –������� Total operating revenues Cost of goods sold Selling, general, and administrative expenses Depreciation Operating income Other income Earnings before interest and taxes ������ Interest expense ����� Pretax income Taxes ������� Current: $71 Deferred: $13 ������ Net income Addition to retained earnings: Dividends: $2, 262 1, 655 327 90 $190 29 $219 49 $170 84 $86 $43
������ –������� Total operating revenues Cost of goods sold Selling, general, and administrative expenses Depreciation Operating income Other income Earnings before interest and taxes Interest expense ������ Pretax income Taxes Current: $71 Deferred: $13 Net income Retained earnings: Dividends: $2, 262 1, 655 327 90 $190 29 $219 49 $170 84 $86 $43
2. 4 NWC q. Net Working Capital ≡ Current Assets – Current Liabilities q. NWC ������� ������
������ $252 m = $707 - $455 2007 Current assets: Cash and equivalents Accounts receivable Inventories Other Total current assets $140 294 269 58 $761 2006 $107 270 280 50 $707 Fixed assets: Property, plant, and equipment $1, 423 $1, 274 Less accumulated depreciation (550) (460 Net property, plant, and equipment 873 814 Intangible assets and other 245 221 Total fixed assets $1, 118 $1, 035 $1, 879 Current Liabilities: Accounts payable Notes payable Accrued expenses Total current liabilities $213 50 223 $486 2006 $197 53 205 $455 Long-term liabilities: Deferred taxes Long-term debt Total long-term liabilities NWC ������� $275$117 $104 471 458 ����� 2007 2005 $588 $562 ���� 252 �����. Stockholder's equity: Preferred stock Common stock ($1 par value) Capital surplus Accumulated retained earnings Less treasury stock Total equity $39 55 347 390 (26) $805 $39 32 327 347 (20) $725 23 ���� ���������� $275 m = $761 m- $486 m Total assets 2007 $1, 742 Total liabilities and stockholder's equity $1, 879 $1, 742
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 Operating Cash Flow: EBIT -173 -23 $42 $36 6 $42 Depreciation $219 $90 Current Taxes -$71 OCF $238
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 Capital Spending -173 -23 $42 $36 6 $42 Purchase of fixed assets $198 Sales of fixed assets -$25 Capital Spending $173
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 -173 -23 $42 $36 6 $42 NWC ���� 275 ����� 2006 ���� 252 ���� $23 ���� ���� NWC.
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 -173 -23 $42 $36 6 $42
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 Cash Flow to Creditors -173 -23 $42 Interest Retirement of debt $42 73 Debt service 122 $36 6 $49 Proceeds from new debt sales -86 Total $36
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 Cash Flow to Stockholders -173 Dividends $43 Repurchase of stock -23 $42 6 Cash to Stockholders 49 Proceeds from new stock issue -43 $36 Total 6 $42 $6
���������� Cash Flow of the Firm Operating cash flow (Earnings before interest and taxes plus depreciation minus taxes) Capital spending (Acquisitions of fixed assets minus sales of fixed assets) Additions to net working capital Total Cash Flow of Investors in the Firm Debt (Interest plus retirement of debt minus long-term debt financing) Equity (Dividends plus repurchase of equity minus new equity financing) Total $238 -173 -23 $42 $36 6 $42
����� Operations ������� Net Income Depreciation ����� , Deferred Taxes ���� ��� – Changes in Assets and Liabilities ������ Accounts Receivable Inventories ������� , Accounts Payable ����� Accrued Expenses ������. Notes Payable Other ������� Total Cash Flow from Operations ��������� �� ������� $86 90 13 -24 11 16 18 -3 -8 $199
����������� Acquisition of fixed assets ����� Sales of fixed assets ����� Total Cash Flow from Investing Activities ����� -$198 25 -$173
��������� �� Retirement of debt (includes notes) Proceeds from long-term debt sales ������ Dividends �������� Repurchase of stock Proceeds from new stock issue -$73 86 -43 -6 43 Total Cash Flow from Financing $7
������ ������ Operations Net Income Depreciation Deferred Taxes Changes in Assets and Liabilities Accounts Receivable Inventories Accounts Payable Accrued Expenses Notes Payable Other Total Cash Flow from Operations Investing Activities Acquisition of fixed assets Sales of fixed assets Total Cash Flow from Investing Activities Financing Activities Retirement of debt (includes notes) Proceeds from long-term debt sales Dividends Repurchase of stock Proceeds from new stock issue Total Cash Flow from Financing Change in Cash (on the balance sheet) �������� ��������� , ������ �� ����������� $86 90 13 -24 11 16 18 -3 -8 $199 -$198 25 -$173 -$73 86 -43 -6 43 $7 $33
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