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Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal year: The company’s Cash flows from operating activities section is as follows: 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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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 16, Problem 3CP
Textbook Problem
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Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal year:

Chapter 16, Problem 3CP, Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal , example  1

The company’s Cash flows from operating activities section is as follows:

Chapter 16, Problem 3CP, Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal , example  2

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.

Chapter 16, Problem 3CP, Tidewater Inc., a retailer, provided the following financial information for its most recent fiscal , example  3 Write a brief memo to your instructor evaluating the financial condition of Tidewater Inc.

To determine

Write a brief memo to the instructor evaluating the financial condition of Incorporation T.

Explanation of Solution

Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

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.

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.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.  In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Write a brief memo to the instructor evaluating the financial condition of Incorporation T.

Memo:

From,

XYZ

To,

The Instructor

Date: February 2, 2018.

Subject: Evaluating the financial condition of Incorporation T.

Dear Sir,

Incorporation T is a retailer which is facing net losses for the past two years. Though the incorporation has returned to profitability, there are many possible dangers which indicate that the future projections of the incorporation are highly uncertain...

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Chapter 16 Solutions

Financial Accounting
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