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- Ay 4 You are briefed about a business plan to launch a new product by your own company. As financial experts, you are being requested to identify all possible cashflows and to estimate strength of each cashflow. Please present your estimation of cashflow. In case of any facts based on market research, please make your own assumption and highlight the same. You are advised to use BMC.5. Using the following answer keys, you are to identify in which activity each of the transactions is classified and its effect on cash flows. Cash Flow Classification...using the capital letter only: O...Operating Activity I...Investing Activity F...Financing Activity OI...Operating and Investing Activity N...Noncash Transaction Effect on Cash Flows...using the capital letter only: I...Increase D...Decrease N...No Effect Transaction Cash Flow Classification Effect on Cash Flows Paid a cash dividend. Decreased accounts receivable. Increased inventory. Retired long-term debt with cash. Sold long-term securities at a loss. Issued stock for equipment. Decreased prepaid insurance. Purchased treasury stock with cash. Retired a fully depreciated truck (no gain or loss). Transferred cash to money market account.please answer all the question. 1. Identify two important variables to be considered when making an investment decision. 2. What must a company do in the long run to be able to provide a return to investors and creditors? 3. What is the primary objective of financial accounting? 4. Define net operating cash flows. Briefly explain why periodic net operating cash flows may not be a good indicator of future operating cash flows. 5. What is meant by GAAP? why should all companies follow GAAP in reporting to external users? 6. Explain the roles of the SEC and the FASB in the sitting of accounting standards.
- Answer the following questions with SOLUTIONS. Pls choose only the answer in the choices. Q1.What is the net cash flow to equity?a. 10,140,489b. 11,103, 272c. 11, 140, 489d. 12, 103, 272 Q2.What is the net Cash flow to the Firm?a. 11,140,489b. 12,103,272c. 12,808,412d. 13,974,000 Q3. How much is the terminal value recognized after the three-year forecast period?a. 10,880,000b. 12,466,667c. 13,090,000d. 10,880,000Q4. How much is the net cash flow of Gising Company in Year 1?a. 390,000b. 290,000c. 220,000d. 140,0003. What is the possible suggestion of the Accountant or Financial Officer to theowner of the company, if there is excess cash above its required maintainingcash balance?A. Pay all creditsB. Buy brand new carC. Purchase additional machineD. Invest in short term investments to earn additional profits.1. How would the SCF indicate to an investor that the company is experiencing a ‘cashcrunch’? 2. What are 3 likely causes and 1 likely consequence of a cash-crunch? 3. Explain the 6 common financial measures that are used in an SCF.
- Question According to the text, which of the following four cash flows should be LAST in order of priority for a firm? A. cash to pay off debts in a timely fashion B. cash to maintain operations C. cash dividends D. cash for reinvesting2. Using the following answer keys, you are to identify in which activity each of the transactions is classified and its effect on cash flows. Cash Flow Classification...using the capital letter only: O...Operating Activity I...Investing Activity F...Financing Activity OI...Operating and Investing Activity N...Noncash Transaction Effect on Cash Flows...using the capital letter only: I...Increase D...Decrease N...No Effect Transaction Cash Flow Classification Effect on Cash Flows Increased accounts payable. Decreased inventory. Increased prepaid insurance. Earned a net income. Issued stock for cash. Retired long-term debt by issuing stock. Purchased a long-term investment with cash. Decreased interest payable. Decreased dividends receivable. Converted bonds to common stock.Q1: Of the three types of business activities summarized in a statement of cash flows, which type is least likely to show positive net cash flows in a successful, growing business? Explain your reasoning.
- A. In the long run it is more important for a business to have positive cash flows from itsoperating activities, investing activities or financing activities? Why?B. Identify three factors that may cause net income to differ from net cash flows from operatingactivities.C. Describe how the Statement of Cash Flows helps investors and creditors perform each ofthe following functions: predict future cash flows; evaluate management decisions; predictthe ability to make debt payments to lenders and pay dividends to stockholders.D. Name and explain the three (3) categories of cash-flow activities.Select TRUE if the statement is correct and FALSE if incorrect. 1. Miller Orr Model is a tool to determine the exact amount of cash needed by the business and it assumes fixed amount of cash through out the operating cycle. * 2. A company buys marketable securities when the cash outflows exceed the cash inflows. * 3. There is no cost in holding large amounts of cash for business operations. * 4. Cash flows are always certain in whatever type of industry the business belongs to. * 5. Baumol Model incorporates the variability of cash flows depending on the seasonality of need. * 6. The longer the operating cycle of a business, the more a business needs cash for its operations. * 7. Any excess of cash beyond the upper limit will be used for investment in marketable securities. * 8. The lower the amount of cash needed, the lower the transaction cost. * 9. Holding more cash means having a higher opportunity cost associated with cash holdings. * 10. Marketable securities are long term…Questions and Exercises 12.2 - The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm? Please keep your original post to under 100 words.