Exercise 1

Taxable Income Tax Rate

$ 50,000 15%
$ 50,001 $ 75,000 25%
$ 75,001 $ 100,000 34%
$ 100,001 $ 335,000 39%
$ 335,001 $ 10,000,000 34%
$ 10,000,001 $ 15,000,000 35%
$ 15,000,001 $ 16,700,000 38%

a. Define Marginal Tax Rate The Marginal Tax Rate is a percentage which is paid on the next dolar earned.
b. Marginal Tax 38.00%
c. Tax Bill $ 5,796,000
d. Average Tax Rate 34.71%
se 1

$ 50,000 $ 7,500
$ 25,000 $ 6,250
$ 25,000 $ 8,500
$ 235,000 $ 91,650
$ 9,665,000 $ 3,286,100
$ 5,000,000 $ 1,750,000
$ 1,700,000 $ 646,000
Tax Bill $ 5,796,000

hich is paid on the next dolar earned.

 Accounting View Financial View
America's Airlines Income Statement America's Airlines Cash Flow Statement

Sales. Revenue Cash Inflow

Sales Costs Cash Outflow
Net Profit Net Cash Flow
nancial View
nes Cash Flow Statement
 Income Statements
2020
Sales $ 3,600,000,000
Cost of Goods Sold $ 2,120,000,000
Gross Profit $ 1,480,000,000
SG&A $ 435,000,000
Depreciation $ 115,000,000
Earning before Interests and Taxes (EBIT) $ 930,000,000
Interest Expenses $ 80,000,000
Taxable Income $ 850,000,000
Taxes (34%) $ 289,000,000
Net Income $ 561,000,000
Dividends $ 220,000,000
Addition to Retained Earnings $ 341,000,000
2021
$ 3,900,000,000
$ 2,230,000,000
$ 1,670,000,000
$ 440,000,000
$ 120,000,000
$ 1,110,000,000
$ 83,000,000
$ 1,027,000,000
$ 349,180,000
$ 677,820,000
$ 240,000,000
$ 437,820,000

a. 1) Earnings before Interest and Taxes (EBIT) $ 930,000,000 $ 1,110,000,000

a. 2) Taxable Income $ 850,000,000 $ 1,027,000,000
a. 3) Net Income $ 561,000,000 $ 677,820,000
b. Retained Earnings They are the cumulative net earnings or profits of a company afte
c. Addition to Retained Earnings $ 341,000,000 $ 437,820,000
d.
Total Shares Outstanding $ 45,000,000 $ 45,000,000
Earnings Per Share (EPS) $ 12.47 $ 15.06
Dividends Per Share (DPS) $ 4.89 $ 5.33
ings or profits of a company after accounting for dividend payments.
 Balance Sheets

Assets
2020 2021
Cash $ 145,000,000 $ 190,000,000

Accounts Receivable $ 390,000,000 $ 425,000,000

Inventory $ 420,000,000 $ 415,000,000
Current Assets $ 955,000,000 $ 1,030,000,000

PPE $ 1,100,000,000 $ 1,230,000,000

Intangible Assets $ 500,000,000 $ 636,000,000
Fixed Assets $ 1,600,000,000 $ 1,866,000,000

Total Assets $ 2,555,000,000 $ 2,896,000,000

Exercise 5

Cash Flow from Assets for 2021

a. Operating Cash Flow

OCF = EBIT + Depreciation - Taxes =

b. Net Capital Spending

NCS = Ending Net Fixed Assets - Beg. Net Fixed Assets + Depreciation =

c. Change in Networking Capital

Changing NWC = Ending NWC - Beginning NWC =

d. Cash Flow from Assets

CFFA = OCF - NCS - Change NWC

Interpret Navianca's CFFA: $329,820.00 is the net amount of money that Navianca generated from its operations in
e Sheets

Liabilities & Equities

2020 2021 NWC 2020
Accounts Payable $ 265,000,000 $ 290,000,000 $ 315,000,000
Accrued Expenses $ 375,000,000 $ 300,000,000
Current Liabilities $ 640,000,000 $ 590,000,000 $ 120,000,000

Notes Payable $ 75,000,000 $ 70,000,000 $ 83,000,000

Long-term Debt $ 720,000,000 $ 635,000,000
Long-term Liabilities $ 795,000,000 $ 705,000,000 $ 240,000,000

Total Liabilities $ 1,435,000,000 $ 1,295,000,000

Common Stock (Paid in Capital) $ 507,000,000 $ 550,000,000

Preferred Stock $ 53,000,000 $ 53,000,000
Accumulated Retained Earnings $ 560,000,000 $ 998,000,000
Total Equity $ 1,120,000,000 $ 1,601,000,000

Total Liabilities & Equity $ 2,555,000,000 $ 2,896,000,000

Cash Flow to Creditors for 2021

$ 880,820,000 Cash Flow to Creditors = Interest Expense - (Long-Term Liabili

$ 386,000,000.00 Cash Flow to Stockholders = (Dividends -(Total equity 2021 - T

$ 125,000,000.00 Cash Flow from Assets

$ 369,820,000.00
a generated from its operations in 2021. $369,820.000 is the aggregate total of all cash flows related to Navianca's assets.
 NWC 2021
$ 440,000,000

pense - (Long-Term Liabilities 2021 - Long-Term Liabilities 2020) = $ 173,000,000

nds -(Total equity 2021 - Total Equity 2020-RE)) = $ 196,820,000

$ 369,820,000
to Navianca's assets.