BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

Solutions

Chapter
Section
BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

STATEMENT OF CASH FLOWS You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm’s records are kept) has been destroyed by fire. So, your first job will be to recreate the firm’s cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. It earned $5 million in net income during the year but paid $800,000 in dividends to common shareholders. Throughout the year, the firm purchased 55.5 million of machinery that was needed for a new project. You have just spoken to the firm’s accountants and learned that annual depreciation expense for the year is $450,000; however, the purchase price for the machinery represents additions to property, plant, and equipment before depredation. Finally, you have determined that the only financing done by the firm was to issue long-term debt of $1 million at a 6% interest rate. What was the firm’s end-of-year cash balance? Recreate the firm’s cash flow statement to arrive at your answer.

Summary Introduction

To prepare: Cash flow statement of Company B.

Introduction:

Statement of Cash Flow:

The statement of cash flow is a part of the financial statements that are included in the annual report of a company. It reports the cash generated or used by the business in a specified period.

Explanation

Cash flow statement for Company B:

Particulars

Amount

($)

Operating Activities 
Net income5,000,000
Depreciation and amortization450,000
Net cash provided by operating activities5,450,000
  
Long-Term Investing Activities 
Machinery purchas...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Show that (nk)=(nnk). Give an interpretation involving subsets.

Probability and Statistics for Engineering and the Sciences

Why do economists sometimes offer conflicting advice to policymakers?

Brief Principles of Macroeconomics (MindTap Course List)

Define net exports and net capital outflow. Explain how they are related.

Principles of Macroeconomics (MindTap Course List)

Explain how CVP analysis can be used for managerial planning.

Managerial Accounting: The Cornerstone of Business Decision-Making

If investors aversion to risk increased, would the risk premium on a high-beta stock increase by more or less t...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Why will global sourcing increase?

Purchasing and Supply Chain Management

Explain why profit-linked productivity measurement is important.

Cornerstones of Cost Management (Cornerstones Series)