Concept explainers
Financial Analysis
Purpose: To help to familiarize you with the financial reporting of a real company in order to further your understanding of the chapter material you are learning.
This case focuses on the
Requirements
- 1. Look at the operating activities section of the statements of cash flows. Compare the net cash provided by operating activities to the net income for each of the three years presented. Are the net income amounts reported on the cash flow statement the same as on the income statement? How does the net cash flow provided by operations compare to the net income? Why do they differ? Is this difference good or bad? Have the net cash flows provided by operations been increasing or decreasing? Why are
depreciation and amortization added back each year? - 2. Look at the investing activities section of the statements of cash flows. What has created the largest inflows and outflows of cash related to investing activities in each of the three years presented? Can you determine whether Columbia Sportswear has been spending money to purchase more property and equipment? Did investing activities provide or use cash for the three years presented?
- 3. Look at the financing activities section of the statements of cash flows. Did financing activities provide or require cash for the three fiscal years presented? What is the significance of this information? What are the stock repurchase and dividend trends? What was the largest item in the financing section for the most recent year?
- 4. How do you feel about the overall sufficiency of cash flows? Does the net cash provided from operations cover the net cash required for investing activities for each of the three years? Does the net cash provided from operations cover the net cash required for financing activities for each of the three years?
- 5. What was the net change in cash and cash equivalents for the most recent fiscal year? Does the ending cash amount agree with the cash and cash equivalents reported on the
balance sheet ? Do you have any other observations about the statement of cash flows?
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Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (4th Edition)
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- See images below and answer these questions according to the financial information given Requirements 1. Answer the following questions for the directors: A. True or false, does the statement of cash flows explains the difference between net income and the change in the cash balance? B. True or false, investors and management use the statement of cash flows to evaluate a firm's profitability? c. True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans? D. True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E. True or false, buying property, plant and equipment would be considered a cash outflow from financing? F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts? c. True or false, suppose Auga Company Ltd just started…arrow_forwardQuestion: Explain the concept of a cash flow statement in financial reporting and its importance in assessing a company's financial health. Provide an example to illustrate the preparation of a cash flow statement.arrow_forward1.state the and explain the Benefits of preparing cashflow statements. 2. Define the following operating activities, investing activities, and financing activities as they relate to cashflow statements, as well as examples under each of these.arrow_forward
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- Which of the following would be included in cash flows from investing activities? Select one: a. Cash used to purchases of equipment b. Cash proceeds from sales c. Cash received from an issuance of bonds d. Dividends paid to stockholders PreviousSave AnswersNextarrow_forwardNow let's learn about the Cash Flow Statement. What is the purpose of Cash Flow Statement. What are the three business activities for which the cash flows are computed. Discuss each activity in detail with suitable examplesarrow_forwardOn the statement of cash flows, which of the following items is classified as an investingactivity?a. Borrowing cash from a bankb. Issuing common stockc. Repaying a loan with cashd. Collecting cash on a long-term loanarrow_forward
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