Communication Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal year: Net income $ 945,000 Return on invested capital 8% Cash flows from operating activities (1,428,000) Cash flows from investing activities 600,000 Cash flows from financing activities 900,000 The company’s Cash Flows from Operating Activities Section is as follows: Net income $ 945,000 Depreciation 210,000 Increase in accounts receivable (1,134,000) Increase in inventory (1,260,000) Decrease in accounts payable (189,000) Net cash flow from operating activities $(1,428,000) An examination of the financial statements revealed the following additional information: Revenues increased during the year as a result of an aggressive marketing campaign aimed at increasing the number of new “Tidewater Card" credit card customers. This is the company’s branded credit card, which can only be used at Tidewater stores. The credit card balances are accounts receivable on Tidewater’s balance sheet. Some suppliers have made their merchandise available at a deep discount. As a result, the company purchased large quantities of these goods in an attempt to improve the company’s profitability. In recent years, the company has struggled to pay its accounts payable on time. The company has improved on this during the past year and is nearly caught up on overdue payables balances. The company reported net losses in each of the two prior years. Write a brief memo to your instructor evaluating the financial condition of Tidewater Inc.

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 13, Problem 13.3TIF
Textbook Problem

Communication

Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal year:

Net income $ 945,000
Return on invested capital 8%
Cash flows from operating activities (1,428,000)
Cash flows from investing activities 600,000
Cash flows from financing activities 900,000

The company’s Cash Flows from Operating Activities Section is as follows:

Net income $ 945,000
Depreciation 210,000
Increase in accounts receivable (1,134,000)
Increase in inventory (1,260,000)
Decrease in accounts payable (189,000)
Net cash flow from operating activities $(1,428,000)

An examination of the financial statements revealed the following additional information:

  • Revenues increased during the year as a result of an aggressive marketing campaign aimed at increasing the number of new “Tidewater Card" credit card customers. This is the company’s branded credit card, which can only be used at Tidewater stores. The credit card balances are accounts receivable on Tidewater’s balance sheet.
  • Some suppliers have made their merchandise available at a deep discount. As a result, the company purchased large quantities of these goods in an attempt to improve the company’s profitability.
  • In recent years, the company has struggled to pay its accounts payable on time. The company has improved on this during the past year and is nearly caught up on overdue payables balances.
  • The company reported net losses in each of the two prior years.

Write a brief memo to your instructor evaluating the financial condition of Tidewater Inc.

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Chapter 13 Solutions

Financial & Managerial Accounting
Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Changes in current operating assets and...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Land transactions on the statement of cash flows...Ch. 13 - Common stock transactions on the statement of cash...Ch. 13 - Cash received from customersdirect method Sales...Ch. 13 - Cash payments for merchandisedirect method The...Ch. 13 - Cash flows from operating activitiesnet loss...Ch. 13 - Effect of transactions on cash flows State the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activities indirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting land transactions on statement of cash...Ch. 13 - Determining cash payments to stockholders The...Ch. 13 - Reporting stockholders' equity items on statement...Ch. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Reporting issuance and retirement of long-term...Ch. 13 - Determining net income from net cash flow from...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Determining selected amounts for cash flows from...Ch. 13 - Cash flows from operating activities direct method...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsdirect method The...Ch. 13 - Statement of cash flows direct method applied to...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows indirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows direct method The...Ch. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 13 - RadioShack: Free cash flow RadioShack Corporation...Ch. 13 - ATT and Facebook: Free cash flow ATT Inc. is a...Ch. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Communication Tidewater Inc., a retailer, provided...

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