Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 16, Problem 5BTN
1.
To determine
Explain the manner in which the cash flow is lagging behind net income.
2.
To determine
Explain the potential sources of financing for the future expansion of Company VB.
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A. In the long run it is more important for a business to have positive cash flows from itsoperating activities, investing activities or financing activities? Why?B. Identify three factors that may cause net income to differ from net cash flows from operatingactivities.C. Describe how the Statement of Cash Flows helps investors and creditors perform each ofthe following functions: predict future cash flows; evaluate management decisions; predictthe ability to make debt payments to lenders and pay dividends to stockholders.D. Name and explain the three (3) categories of cash-flow activities.
Discuss the relations between net income and cash flow from operations and among cashflows from operating, investing, and financing activities for the firm, especially for 2012. Identify signals that might raise concerns for an analyst.
The answer is in the book and I need a different answer. Please explain without copying from another source! It would be nice if you use your words. Thanks!
Which of the following are ‘uses’ of cash from a cash flow perspective? (mark all that apply) a. Borrowing on the firm’s revolving line of credit b. Implementing a new share buyback program c. Purchasing a piece of real estate where you plan to build a new factory d. Purchasing inventory
Chapter 16 Solutions
Principles of Financial Accounting.
Ch. 16 - A company uses the indirect method to determine...Ch. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - The following information is available for a...Ch. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - Prob. 3DQCh. 16 - Prob. 4DQCh. 16 - When a statement of cash flows is prepared using...
Ch. 16 - Prob. 6DQCh. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - Prob. 9DQCh. 16 - If a company reports positive net income for the...Ch. 16 - Prob. 11DQCh. 16 - Prob. 12DQCh. 16 - Prob. 13DQCh. 16 - Prob. 14DQCh. 16 - Prob. 15DQCh. 16 - Classify the following cash flows as either...Ch. 16 - Statement of cash flows Label the following...Ch. 16 - Prob. 3QSCh. 16 - Prob. 4QSCh. 16 - Prob. 5QSCh. 16 - Prob. 6QSCh. 16 - Prob. 7QSCh. 16 - Prob. 8QSCh. 16 - Prob. 9QSCh. 16 - The plant assets section of the comparative...Ch. 16 - Prob. 11QSCh. 16 - Prob. 12QSCh. 16 - Prob. 13QSCh. 16 - Prob. 14QSCh. 16 - Prob. 15QSCh. 16 - Prob. 16QSCh. 16 - Prob. 17QSCh. 16 - Prob. 18QSCh. 16 - Prob. 19QSCh. 16 - A company uses a spreadsheet to prepare its...Ch. 16 - Prob. 21QSCh. 16 - Bioware Co. reports cost of goods sold of 42,000....Ch. 16 - Prob. 23QSCh. 16 - Prob. 24QSCh. 16 - Refer to the data in QS 16-7. 1. How much cash is...Ch. 16 - Refer to the data in QS 16-7. 1. How much cash is...Ch. 16 - Prob. 27QSCh. 16 - Prob. 1ECh. 16 - Prob. 2ECh. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Fitz Company reports the following information....Ch. 16 - Prob. 6ECh. 16 - Prob. 7ECh. 16 - Prob. 8ECh. 16 - Use the following information to determine cash...Ch. 16 - For each of the following separate transactions,...Ch. 16 - Prob. 11ECh. 16 - Use the following information to prepare a...Ch. 16 - Prob. 13ECh. 16 - Complete the following spreadsheet in preparation...Ch. 16 - Prob. 15ECh. 16 - Prob. 16ECh. 16 - Prob. 17ECh. 16 - Prob. 18ECh. 16 - Use the following information about Ferron Company...Ch. 16 - Prob. 20ECh. 16 - Prob. 1APCh. 16 - Refer to the information in Problem 16-1A....Ch. 16 - Forten Companys current-year income statement,...Ch. 16 - Prob. 4APCh. 16 - Prob. 5APCh. 16 - Golden Corp.s current-year income statement,...Ch. 16 - Prob. 7APCh. 16 - Prob. 8APCh. 16 - Prob. 1BPCh. 16 - Prob. 2BPCh. 16 - Gazelle Corporations current-year income...Ch. 16 - Prob. 4BPCh. 16 - Prob. 5BPCh. 16 - Prob. 6BPCh. 16 - Prob. 7BPCh. 16 - Prob. 8BPCh. 16 - Prob. 16SPCh. 16 - Use Apples financial statements in Appendix A to...Ch. 16 - Prob. 2AACh. 16 - Prob. 3AACh. 16 - Prob. 1BTNCh. 16 - COMMUNICATING IN PRACTICE Your friend, Diana Wood,...Ch. 16 - Prob. 3BTNCh. 16 - Prob. 5BTNCh. 16 - Prob. 6BTN
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- Ay 4 You are briefed about a business plan to launch a new product by your own company. As financial experts, you are being requested to identify all possible cashflows and to estimate strength of each cashflow. Please present your estimation of cashflow. In case of any facts based on market research, please make your own assumption and highlight the same. You are advised to use BMC.arrow_forward3. What is the possible suggestion of the Accountant or Financial Officer to theowner of the company, if there is excess cash above its required maintainingcash balance?A. Pay all creditsB. Buy brand new carC. Purchase additional machineD. Invest in short term investments to earn additional profits.arrow_forwardA business must show an increase in cash in which section in the long run to remain solvent? Operating Investing Financing Noncash investing and financingarrow_forward
- Answer TRUE or False to the following statements/questions: A) Does the statement of cash flows explains the difference between net income and the change in the cash balance? B) Investors and management use the statement of cash flows to evaluate a firm's profitability? C) True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans? D) The financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E) Buying property, plant and equipment would be considered a cash outflow from financing? F) The financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts? G) Suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in…arrow_forward“Cash Is King” for all businesses You can determine a company’s cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. Which of the following is true for the statement of cash flows? It reflects revenues when earned. It reflects cash generated and used during the reporting period. A. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Operating Activity Investing Activity Financing Activity A company records a loss of $70,000 on the sale of its outdated inventory. D and W Co. sells its last season’s inventory to a discount store. Yum…arrow_forwardQuestion 1 Josh and Amy are finance trainees at a company which has been reporting a positive cash flow for the last 5 years. Both Josh and Amy have learned in their finance courses at the university that “cash is king” and is more important than reported profits by a company. Guided by this knowledge, none of them feels a need to review the company’s cash flow pattern over time. Are they necessarily correct in their understanding about a firm’s long-term cash flow situation? Discuss brieflyarrow_forward
- “Cash Is King” for all businesses You can determine a company’s cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. Which of the following is true for the statement of cash flows? It reflects cash generated and used during the reporting period. It reflects revenues when earned. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Operating Activity Investing Activity Financing Activity Yum Co. uses cash to repurchase 10% of its common stock. A pharmaceutical company buys marketing rights to sell a drug exclusively in East Asian markets.…arrow_forwardQuestion 1 Josh and Amy are finance trainees at a company which has been reporting a positive cash flow for the last 5 years. Both Josh and Amy have learned in their finance courses at the university that “cash is king” and is more important than reported profits by a company. Guided by this knowledge, none of them feels a need to review the company’s cash flow pattern over time. Are they necessarily correct in their understanding about a firm’s long-term cash flow situation?arrow_forwardQuestion According to the text, which of the following four cash flows should be LAST in order of priority for a firm? A. cash to pay off debts in a timely fashion B. cash to maintain operations C. cash dividends D. cash for reinvestingarrow_forward
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