1 . Building a Balance Sheet. Arredondo, Inc., has current assets of $2,170, net fixed
assets of $9,300, current liabilities of $1,350, and long-term debt of $3,980.
What is the value of the shareholders’ equity account for this firm?
How much is net working capital?
2. Calculating Cash Flows. Consider the following abbreviated financial statements for
Cabo Wabo, Inc.:
a. What is owners’ equity for 2009 and 2010?
b. What is the change in net working capital for 2010?
c. In 2010, Cabo Wabo purchased $5,616 in new fixed assets. How much in fixed
assets did Cabo Wabo sell? What is the cash flow from assets for the year? (The tax
rate is 40 percent.)
d. During 2010, Cabo Wabo raised $1,690 in new long-term debt. How much long-term
debt must Cabo Wabo have paid off during the year? What is the cash flow to creditors?
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Current assets: 2,179
Net Fixed Assets: 9 300
Total Assets: 11,479
Current Liabilities 1,350
Long-term Debt 3,980
Total Debt: 5,330
Equity 6,149 (A=D+E)
Net Working Capital = Current Assets – Current liabilities
= 2,179 – 1,350