Statement of
It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.
Indirect method:
Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.
Cash flows from operating activities: These are the cash produced by the normal business operations.
The below table shows the way of calculation of cash flows from operating activities:
Cash flows from operating activities (Indirect method) |
Add: Decrease in current assets |
Increase in current liability |
|
Loss on sale of plant assets |
Deduct: Increase in current assets |
Decrease in current liabilities |
Gain on sale of plant assets |
Net cash provided from or used by operating activities |
Table (1)
Cash flows from investing activities:
Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.
The below table shows the way of calculation of cash flows from investing activities:
Cash flows from investing activities |
Add: Proceeds from sale of fixed assets |
Sale of marketable securities / investments |
Interest received |
Dividend received |
Deduct: Purchase of fixed assets/long-lived assets |
Purchase of marketable securities |
Net cash provided from or used by investing activities |
Table (2)
Cash flows from financing activities:
Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.
The below table shows the way of calculation of cash flows from financing activities:
Cash flows from financing activities |
Add: Issuance of common stock |
Proceeds from borrowings |
Proceeds from issuance of debt |
Issuance of bonds payable |
Deduct: Payment of dividend |
Repayment of debt |
Interest paid |
Redemption of debt |
Repurchase of stock |
Net cash provided from or used by financing activities |
Table (3)
To Prepare: A statement of cash flows using the indirect method for presenting cash flows from operating activities.
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Chapter 14 Solutions
EBK FINANCIAL & MANAGERIAL ACCOUNTING
- Statement of Cash Flows—Direct Method Lang Company has not yet prepared a formal statement of cash flows for 2016. Following are comparative balance sheets as of December 31, 2016 and 2015, and a statement of income and retained earnings for the year ended December 31, 2016: Required For purposes of a statement of cash flows, are the U.S. Treasury bills cash equivalents? If not, how should they be classified? Explain your answers. Prepare a statement of cash flows for 2016 using the direct method in the Operating Activities section.arrow_forwardFrom the following information, balance the ledger Cash A/c Date Particulars Amount Date Particulars Amount 1.6.2017 CAPITAL 84000 5.6.2017 Purcahses 14600 10.6.2017 sales 9500 30.6.2017 General expenses 178 30.6.2017 Salaries 4500 30.6.17 Bal C/d ? Select one: a. 84222 OMR b. 45522 OMR c. 74222 OMR d. 94222 OMRarrow_forwardCurrent Assets Cash A/R Inventory Total Net Plant & Equip Total Assets Tomson Corporation 2013 and 2014 Statement of Financial Position Assets 2013 $ 8,436 21,530 38.760 $ 68,726 $ 226.706 $295,432 2014 $ 10,157 23,406 42.650 $ 76,213 Current Liabilities A/P Notes Payable Total 1. The current ratio for each year 2. The quick ratio for each year Long-term Debt Owner's Equity Common Stock & Paid-in Surplus Retained Earnings $248,306 Total Total Liabilities & $324,519 Owners Equity Liabilities 3. The cash ratio for each year 4. The NWC to total assets ratio for each year 2013 5. The debt-equity ratio and the equity multiplier for each year 6. The total debt ratio and the long-term debt ratio for each year Round all answers to 2 decimal places. $ 43,050 18.384 $61.434 $ 25.000 $ 40,000 168.998 $ 208,998 $ 295,432 2014 1. Prepare: The 2014 combined common-size, common-base year statement of financial position for Tomson. Round your intermediate calculations to 2 decimal places…arrow_forward
- Spreadsheet and Statement of Cash Flows The following information was taken from Lamberson Company's accounting records: Account Balances Account Titles January 1,2016 December 31,2016 Debits Cash $ 1,400 $ 2,400 Accounts Receivable (net) 2,800 2,690 Marketable Securities (at cost) 1,700 3,000 Allowance for Change in Value 500 800 Inventories 8,100 7,910 Prepaid Items 1,300 1,710 Investments (long-term) 7,000 5,400 Land 15,000 15,000 Buildings and Equipment 32,000 46,200 Discount on Bonds Payable — 290 $69,800 $85,400 Credits Accumulated Depreciation $16,000 $16,400 Accounts Payable 3,800 4,150 Income Taxes Payable 2,400 2,504 Wages Payable 1,100 650 Interest Payable — 400 Note Payable (long-term) 3,500 — 12% Bonds Payable — 10,000 Deferred Taxes Payable 800 1,196 Convertible Preferred Stock, $100 par 9,000 — Common Stock, $10 par 14,000 21,500 Additional Paid-in Capital 8,700 13,700 Unrealized Increase in Value of…arrow_forwardStatement of Cash Flows—Direct Method applied to PR 16-1A The comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is as follows: Dec. 31, 20Y3 Dec. 31, 20Y2 Assets Cash $ 251,860 $ 238,290 Accounts receivable (net) 92,610 84,960 Inventories 261,030 250,990 Investments 0 97,660 Land 133,790 0 Equipment 285,270 224,620 Accumulated depreciation-equipment (67,800) (60,500) Total assets $956,760 $836,020 Liabilities and Stockholders' Equity Accounts payable $ 172,940 $ 164,700 Accrued expenses payable 17,390 21,740 Dividends payable 9,400 7,500 Common stock, $1 par 51,100 39,290 Paid-in capital: Excess of issue price over par-common stock 194,400 113,700 Retained earnings 511,530 489,090 Total liabilities and stockholders’ equity $956,760 $836,020 The income statement for the year ended December 31, 20Y3, is as…arrow_forwardStatement of Cash Flows—Direct Method The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: Dec. 31, 20Y6 Dec. 31, 20Y5 Assets Cash $234,050 $216,220 Accounts receivable (net) 84,790 77,660 Inventories 239,340 229,910 Investments 0 89,080 Land 122,770 0 Equipment 264,080 203,280 Accumulated depreciation-equipment (61,820) (54,820) Total assets $883,210 $761,330 Liabilities and Stockholders' Equity Accounts payable $159,860 $149,980 Accrued expenses payable 15,900 19,790 Dividends payable 8,830 6,850 Common stock, $10 par 47,690 37,310 Excess of paid-in capital over par 179,290 103,540 Retained earnings 471,640 443,860 Total liabilities and stockholders’ equity $883,210 $761,330 The income statement for the year ended December 31, 20Y6, is as follows: Sales $1,406,850 Cost of merchandise sold 579,300 Gross…arrow_forward
- Exercise in Calculating Activity Ratios United Instruments, Inc. Selected Financial Statement Statistics as of Dec. 31, 2017 (amounts in millions): Accounts receivable Inventory PP&E, net $ 544 337 1,526 2,707 Total assets Accounts payable 272 Sales 2,690 Calculate the following ratios and comment: Accounts receivable turnover and Days receivables: Inventory turnover and Days inventory: Accounts payable turnover and Days payables: Cash cycle: Fixed assets turnover and Days fixed assets: Total assets turnover and Days total assets:arrow_forwardStatement of Cash Flows—Direct Method The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: Dec. 31, 20Y6 Dec. 31, 20Y5 Assets Cash $277,770 $258,990 Accounts receivable (net) 100,630 93,020 Inventories 284,060 275,390 Investments 0 106,700 Land 145,700 0 Equipment 313,410 243,490 Accumulated depreciation-equipment (73,370) (65,660) Total assets $1,048,200 $911,930 Liabilities and Stockholders' Equity Accounts payable $189,720 $179,650 Accrued expenses payable 18,870 23,710 Dividends payable 10,480 8,210 Common stock, $10 par 56,600 44,680 Paid-in capital: Excess of issue price over par-common stock 212,780 124,020 Retained earnings 559,750 531,660 Total liabilities and stockholders’ equity $1,048,200 $911,930 The income statement for the year ended December 31, 20Y6, is as follows: Sales $1,566,470 Cost of…arrow_forwardHow do you calculate a statement of Cash Flows using the below details: Maple Group Ltd Comparative Balance Sheet December 31, 2020 and 2019 2020 2019 Increase/Decrease Assets Cash and cash Equivalent $ 51,500.00 $ 45,400.00 $ 6,100.00 Accounts Receivable $ 51,100.00 $ 61,400.00 $ 10,000.00 Inventories $ 61,400.00 $ 51,900.00 $ 9,500.00 Fixed Assets, net $ 160,000.00 $ 110,000.00 $ 50,000.00 Total Assets $ 324,000.00 $ 268,700.00 $ 55,600.00 Liabilities Accounts Payable $ 35,450.00 $ 27,800.00 $ 7,650.00 Accrued liabilities $ 31,000.00 $ 37,550.00 -$ 6,550.00 Long-term notes payable $ 60,000.00 $ 78,540.00 -$ 18,540.00 Stockholders Equity: Common Stock $ 143,050.00 $ 105,110.00 $ 37,940.00 Retained Earnings $ 54,800.00 $…arrow_forward
- Current Attempt in Progress XYZ provided the following financial information: XYZBalance SheetAs of 12/31/19 Assets: Liabilities and Equity: Cash and marketable securities $27,476 Accounts payable and accruals $154,860 Accounts receivable $143,519 Short-term notes payable $21,255 Inventory $212,379 Total current liabilities $176,115 Total current assets $383,374 Long term debt $155,510 Net plant and equipment $602,704 Total liabilities $331,625 Goodwill and other assets $42,422 Common stock $312,719 Retained earnings $384,156 Total assets $1,028,500 Total liabilities and equity $1,028,500 In addition, it was reported that the firm had a net income of: $158,402 and net sales of: $4,272,431 Calculate the following ratios for this firm (Use 365 days for calculation. Round answers to 2 decimal places, e.g.…arrow_forwardSeminole Corporation reported the following items at December 31, 2021, and 2020: (Click the icon to view the comparative financial information.) Read the requirements. Requirement 1. Compute the company's (a) quick (acid-test) ratio and (b) days' sales outstanding for 2021. Evaluate each ratio value as strong or weak. All sales are on account with terms of net 30 days. (a) Enter the formula and calculate the quick (acid-test) ratio for 2021. (Abbreviation used: Cash* = Cash and cash equivalents. Round your final answer to two decimal places.) Cash* + Short-term investments + Net current receivables + Total current liabilities = Quick (acid-test) ratio $ Seminole's quick (acid-test) ratio is considered fairly weak. (b) Select the formula and calculate Seminole's days' sales outstanding for 2021. (Round interim calculations to two decimal places, XX.XX. Round the days' sales outstanding up to the next whole day.) Accounts receivable turnover = + Days' sales outstanding Seminole's days'…arrow_forwardAssets: Cash Accounts receivable Inventories Total current assets Net fixed assets Total assets Liabilities and equity: Accounts payable Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total common equity Total liabilities and equity $ $ $ $ $ $ $ 2015 200,000 864,000 2,000,000 3,064,000 6,000,000 9,064,000 1,400,000 1,600,000 3,000,000 2,400,000 3,000,000 664,000 3,664,000 9,064,000 2014 170,000 700,000 1,400,000 $2,270,000 5,600,000 $7,870,000 $ $1,090,000 1,800,000 $2,890,000 2,400,000 2,000,000 580,00 $2,580,000 $7,870,000 If a firm has EBIT = 1,350,000 and 40% Tax rate, calculate Free Cash Flow.arrow_forward
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