Buck's Dilema

The cash basis of accounting records revenues when cash is received and expenses when cash is paid out. The accrual basis of accounting records revenues when they are earned and expenses when resources are used.

The company maintains a minimum cash balance of at least $50,000 at the end of each month. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

| |finance the balance. How much will each monthly loan payment be if they can borrow the necessary funds for 30 years at 9% per |

• On June 15, 2010, Buck drew $60 million, and signed a note to repay the full amount

Dicks Sporting Good is the largest and most profitable publicly held specialty sporting goods retailer in the nation. In 2012, they strengthened their competitive position by expanding their store network, enhancing the customers shopping environment, growing their own private brand portfolio and upgrading several of their key technology systems. They have also set the stage for future growth by opening a fourth distribution center, breaking new ground with the “Untouchable” marketing campaign and fueling the market research engine by testing new retail concepts. For the last three years the store profits grew tremendously. The initiatives drove sales up and they were able in 2012 to have $345 million in cash and cash equivalents and no outstanding borrowings under our revolving credit facility (DKS Annual

The statement of cash flows breaks down the cash exchange of the long term debt for the past two years. Under the Financing Activities portion of the cash flows statement it shows the long term debt broken down intoproceeds from and repayment of bank loans. The calculations of the changes in the past two years are expressed below in thousands:

The statement of cash flows presents investing and financing activities so that even noncash transactions of an investing and financing nature are disclosed in the financial statements. If they affect financial conditions significantly, the FASB requires that they be disclosed in either a separate schedule at the bottom of the statement of cash flows or in a separate note or supplementary schedule to the financial statements.

Mead pays no funds to Generous Motors or GMCC until it sells the automobile. Mead must then repay the balance of the loan plus interest to GMCC. How should Mead report the acquisition and repayment transactions in its Statement of Cash Flows?

DescriptionInvestmentBuy van w/cashFurniture on accountServices on accountRepairs Collected amountPay on accountPay electric billWithdrawalCollected amountEnding Balance

1. Based on the 10 percent compensating balance requirement, how much would Pierce Control Systems have to borrow to acquire $10 million in needed funds?

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

Also this cashflows also depend on the financing alternative we choose. In this case I used the Industrial Revenue Bond.

After conducting a DCF analysis, Carded Graphics should buy the new sheeter because it will ad value to the company. In exhibit one, after the initial investment in 2009, the rest of the cash flows for the nine

The pro forma statements of cash-flows are projected statements of cash flows. Cash receipts are classified as operating, investing, or financing activities. In direct presentation it reports the major classes of gross cash, operating receipts, and payments and the difference between them. Indirect presentation reconciles net income with the net operating cash-flows which requires balance sheet data such as accounts receivable, accounts payable, inventory, and net income.

The final section of the statement of cash flows is the financing section, which shows the dividends paid, the purchases of stock, the net borrowings, and other possible cash flows from financing activities. A positive trend for investors is the fact that dividends paid has increased (even though it is negative to the firm) as well as sale purchase of stock, from 2009 to 2011 and even increased quarterly in 2011. The net borrowings is off an on from 2009 to 2011 possibly because of certain funds needed in particular years. In 2009, it was $5,746,000,000 and in 2010, it was $190,000,000. It shot back up again in 2011, with $5,960,000,000.