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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear

Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com.

Required:

Find net cash provided by operating activities for each company:

a. What was the amount of cash provided by operating activities for the year ending December 31, 2016 for Under Armour? What was the amount of cash provided by operating activities for the year ending December 20l6 for Columbia?

b. What was the most significant adjustment that caused a difference between net income and net cash provided by operating activities?

c. Comparing net income to net cash provided by operating activities, can you draw any conclusions as to the quality of each company’s earnings?

To determine

Operating Cash Flow means that cash flow which is from the business main activity. Like sale of goods and paid salary, factory rent.

Operating activity show that the inflow or outflow cash. Only that cash which is the main source of income and expense for the business.

To discuss:

Find net cash provided by operating activities for each company:

a) What amount is from the operating activity for the year-end of Company-A and Company-B?

b) What is the difference between the net income and net cash provided by the operating activity?

c) Comparing the net income to net cash provided by operating activity, can you draw any conclusion as to the quality of each company’s earnings?

Explanation

Deprecation is a non-cash item, at the time preparation of income statement account depreciation expense must be included but at preparing the cash flow statement depreciation will be ignoring...

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