Companies that are in their first year of operation often generates little revenues from ordinary activities even if they invest a lot in their infrastructure and their working capital, mainly in the inventory. As a result, what would be the portrait of the cash flows of a company that is in its first year of operation? a) Cash flows for activities from operating activities: NEGATIVE Cash flows for activities from investing activities: NEGATIVE Cash flows for activities from financing activities: POSITIVE b) Cash flows for activities from operating activities: NEGATIVE Cash flows for activities from investing activities: POSITIVE Cash flows for activities from financing activities: POSITIVE X c) Cash flows for activities from operating activities: POSITIVE Cash flows for activities from investing activities: NEGATIVE Cash flows for activities from financing activities: NEGATIVE d) Cash flows for activities from operating activities: POSITIVE Cash flows for activities from investing activities: NEGATIVE Cash flows for activities from financing activities: POSITIVE

Companies that are in their first year of operation often generates little revenues from ordinary activities even if they invest a lot in their infrastructure and their working capital, mainly in the inventory. As a result, what would be the portrait of the cash flows of a company that is in its first year of operation? a) Cash flows for activities from operating activities: NEGATIVE Cash flows for activities from investing activities: NEGATIVE Cash flows for activities from financing activities: POSITIVE b) Cash flows for activities from operating activities: NEGATIVE Cash flows for activities from investing activities: POSITIVE Cash flows for activities from financing activities: POSITIVE X c) Cash flows for activities from operating activities: POSITIVE Cash flows for activities from investing activities: NEGATIVE Cash flows for activities from financing activities: NEGATIVE d) Cash flows for activities from operating activities: POSITIVE Cash flows for activities from investing activities: NEGATIVE Cash flows for activities from financing activities: POSITIVE

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter8: Sarbanes-oxley, Internal Control, And Cash

Section: Chapter Questions

Problem 25E: Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattels toys include Barbie...

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Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattels toys include Barbie fashion dolls and accessories, Hot Wheels, and Fisher-Price brands. For a recent year, Mattel reported the following net cash flows from operating activities (in thousands): Explain why Mattel reported negative net cash flows from operating activities during the second and third quarters and a large positive cash flow for the fourth quarter, with overall net positive cash flow for the year.
Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattels toys include Barbie fashion dolls and accessories, Hot Wheels, and Fisher-Price brands. For a recent year, Mattel reported the following net cash flows from operating activities (in thousands): Explain why Mattel reported negative net cash flows from operating activities during the first and second quarters and a large positive cash flow for the fourth quarter, with overall net positive cash flow for the year.
Lucas Hunter, president of Simmons Industries Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the companys just completed financial statements. The following discussion took place between Lucas Hunter and Simmons controller, John Jameson, in January, after the close of the fiscal year: Lucas: Ive been reviewing our financial statements for the last year. I am disappointed that our net income per share has dropped by 10% from last year. This wont look good to our shareholders. Is there anything we can do about this? John: What do you mean? The past is the past, and the numbers are in. There isnt much that can be done about it. Our financial statements were prepared according to generally accepted accounting principles, and I dont see much leeway for significant change at this point. Lucas: No, no. Im not suggesting that we cook the books. But look at the cash flow from operating activities on the statement of cash flows. The cash flow from operating activities has increased by 20%. This is very good newsand, I might add, useful information. The higher cash flow from operating activities will give our creditors comfort. John: Well, the cash flow from operating activities is on the statement of cash flows, so I guess users will be able to see the improved cash flow figures there. Lucas: This is true, but somehow I think this information should be given a much higher profile. I dont like this information being buried in the statement of cash flows. You know as well as I do that many users will focus on the income statement. Therefore, I think we ought to include an operating cash flow per share number on the face of the income statementsomeplace under the earnings per share number. In this way, users will get the complete picture of our operating performance. Yes, our earnings per share dropped this year, but our cash flow from operating activities improved! And all the information is in one place where users can see and compare the figures. What do you think? John: Ive never really thought about it like that before. I guess we could put the operating cash flow per share on the income statement, underneath the earnings per share amount. Users would really benefit from this disclosure. Thanks for the ideaIll start working on it. Lucas: Glad to be of service. How would you interpret this situation? Is John behaving in an ethical and professional manner?
Interpreting the Statement of Cash Flows. Texas Instruments primarily develops and manufactures semiconductors for use in technology-based products for various industries. The manufacturing process is capital-intensive and subject to cyclical swings in the economy. Because of overcapacity in the industry and a cutback on spending for technologyproducts due to a recession, semiconductor prices collapsed in Year 1 and commenced a steadycomeback during Years 2 through 4. Exhibit 3.19 presents a statement of cash flows for Texas Instruments for Year 0 to Year 4. REQUIRED Discuss the relations between net income and cash flows from operations and among cash flows from operating, investing, and financing activities for the firm over the five-year period.
You are reviewing a company’s financial statements and find that it has had a negative cash flow from assets this year. What might explain this? Is this a good sign or a bad sign?
Discuss and explain the difference between profit/loss and cash flow. How could a company have positive cash flow, but show a net loss at year end? What are some examples of industries and/or companies that might generate subtantial cash flow, but could lose money? Conversely, what are some examples of industries and/or companies that might generate very limited cash flow, but could show a profit at year end?
Last year, National Co. reported negative net cash flow and negative free cash flow. However, its cash on the balance sheet increased. Which of the following could explain these changes in its cash position? a. The company had a sharp increase in its depreciation and amortization expenses. b. The company had a sharp increase in its inventories. c. The company issued new common stock. d. None of the choices
When a company reports negative net cash flows from operations _____. a.ratio of accounts payable to annual financing expenses helps in assessing the survival of the company b.ratio of cash to monthly cash expenses helps in assessing the survival of the company c.ratio of equity to monthly cash expenses helps in assessing the survival of the company d.ratio of equity to annual cash expenses helps in assessing the survival of the company
with the help of the statement of income of BHP ltd attached please answer the below: - What was the trend in cash flow from (continuing) operations of the firm? Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. Was the firm able to generate enough cash from operations to pay for all of its capital expenditures?
Graffiti Advertising, Inc., reported the following financial statements for the last two years. a. Calculate the operating cash flow. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b.Calculate the change in net working capital. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c. Calculate the net capital spending. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) d. Calculate the cash flow from assets. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) e. Calculate the cash flow to creditors. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) f. Calculate the cash flow to stockholders. (A negative answer should be indicated by a minus sign. Do not round intermediate…
Howe industries reported a positive cash flow from operations on its cash flow statement, yet cash on the balance sheet decreased relative to the prior year's balance. Which of the following could explain this? Question 11 options: The company issued long-term debt The company issued new common stock The company made a large investment in fixed assets Depreciation expense increased
Can a company report negative net cash flows from operating activities for the year on the statement f cash flows but still have positive net income on the income statement? Explain with examples please.