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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 16, Problem 16EA
Textbook Problem
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The following are excerpts from Hamburg Company’s statement of cash flows and other financial records. Compute the following for the company:

Chapter 16, Problem 16EA, The following are excerpts from Hamburg Companys statement of cash flows and other financial

A. free cash flow

B. cash flows to sales ratio

C. cash flows to assets ratio

To determine

(a)

Free cash flows:

Free cash flow is generated by deducting capital expenditure and cash dividend payments from cash flow from operating activities.

Cash flow from operating activities:

The total amount of cash generated from the regular operations of a business is called cash flow from operating activities.

To calculate:

Free cash flow of Hamburg company.

Explanation of Solution

Company HFree Cash Flow
Particulars Amount ($) Amount ($)
Cash flow from operating activities 100,000
To determine

(b)

Free cash flows:

Free cash flow is generated by deducting capital expenditure and cash dividend payments from cash flow from operating activities

Sales revenue:

The total amount of cash generated by selling of goods & services is called sales revenue.

To calculate:

Cash flows to sales ratio.

To determine

(c)

Free cash flows:

Free cash flow is generated by deducting capital expenditure and cash dividend payments from cash flow from operating activities

Total assets:

Assets are referred as anything in possession of business which has an economic value, and which can benefit the business for a period of 1 or more years. Total assets are the total amount of owned asset by a business.

To calculate:

Cash flow to assets ratio.

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Chapter 16 Solutions

Principles of Accounting Volume 1
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Ch. 16 - Which of the following would trigger a subtraction...Ch. 16 - Which of the following represents a source of cash...Ch. 16 - Which of the following would be included in the...Ch. 16 - If beginning cash equaled $10,000 and ending cash...Ch. 16 - Which of the following is a stronger indicator of...Ch. 16 - What function does the statement of cash flows...Ch. 16 - Is it possible for a company to have significant...Ch. 16 - What categories of activities are reported on the...Ch. 16 - Describe three examples of operating activities,...Ch. 16 - Describe three examples of investing activities,...Ch. 16 - Describe three examples of financing activities,...Ch. 16 - Explain the difference between the two methods...Ch. 16 - Why is depreciation an addition in the operating...Ch. 16 - When preparing the operating section of the...Ch. 16 - If a company reports a gain/(loss) from the sale...Ch. 16 - Note payments reduce cash and are related to...Ch. 16 - Is there any significance that can be attributed...Ch. 16 - 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