Computing taxable income and earnings before taxes


1) Sam’s Office Supplies currently reported $13,500 of sales, $7,250 of operating costs other than depreciation, and $1,750 of depreciation. Company had no amortization charges and no non-operating income. It had= $9,000 of bonds outstanding which carry a 9.5% interest rate, and its federal-plus-state income tax rate was= 40%. How much was firm's taxable income, or earnings before taxes (EBT)?

2) Over the years, Janjigian Corporation's stockholders have given $29,750 of capital, partially when they bought new issues of stock and partially when they allowed management to retain some of firm's earnings. Firm now has= 2,500 shares of common stock outstanding and it sell at the price of $42.00 per share. How much value has Janjigian's management added to stockholder wealth over the years, that is, what is Janjigian's MVA?

3) Zumbahlen Inc. has balance sheet given below. How much total net operating capital does firm have?

Cash $ 20.00 Accounts payable $ 30.00
Short-term investments 55.00 Accruals 50.00
Accounts receivable 30.00 Notes payable 30.00
Inventory 60.00 Current liabilities $110.00
Current assets $165.00 Long-term debt 100.00
Gross fixed assets $175.00 Common stock 30.00
Accumulated deprec. 40.00 Retained earnings 60.00
Net fixed assets $135.00 Total common equity $ 90.00
Total assets $300.00 Total liab. & equity $300.00

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Computing taxable income and earnings before taxes
Reference No:- TGS015030

Expected delivery within 24 Hours