Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 20PC
a
To determine
Sate the operating difficulties and need of restructuring.
b
To determine
State the indicators of turnaround efforts and relation among cash flows.
c
To determine
State the signals of firm is engaged in aggressive revenue recognition and fixed its general operating problems.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Interpreting the Statement of Cash Flows. Sunbeam Corporation manufactures and sells a variety of small household appliances, including toasters, food processors, and waffle grills. Exhibit 3.21 presents a statement of cash flows for Sunbeam for Year 5, Year 6, and Year 7. After experiencing decreased sales in Year 5, Sunbeam hired Albert Dunlap in Year 6 to turn the company around. Albert Dunlap, known in the industry as “Chainsaw Al,” had previously directed restructuring efforts at Scott Paper Company. The restructuring effort at Sunbeam generally involved firing employees and cutting costs aggressively. Most of these restructuring efforts took place during Year 6. The market expected significantly improved results in Year 7. Reported sales increased 18.7% between Year 6 and Year 7, and net income improved. However, subsequent revelations showed that almost half of the sales increase resulted from fraudulent early recognition of revenues in the fourth quarter of Year 7 that the firm…
Directions: Read and analyze the problem below then do the following requirements.
Assuming, you owned a sari-sari store and had a beginning cash amounting of P50, 000 and the following transactions occurred during the month.
Purchase of goods. Paid in cash. 100, 000
Sales of goods. Received cash. 150,000
Paid utilities 30,000
Paid rent 10,000
Sold equipment for cash 100, 000
Owner withdraws investment 10, 000
Required:
Compute for your net cash flow generated/used in operating activities.
Compute for your net cash flow generated/used in investing activities.
Compute for your net cash flow used in financing activities.
Prepare a cash flows statement using direct method.
Capstone Turbine Corporation produces and sells turbine generators for such applications as charging electric, hybrid vehicles. Capstone Turbine reported the following financial data for a recent year (in thousands):
Net cash flows from operating activities $(23,018) Cash and cash equivalents 32,221
a. Determine the monthly cash expenses. Round to one decimal place.b. Determine the ratio of cash to monthly cash expenses. Round to one decimal place.c. Based on your analysis, do you believe that Capstone Turbine will remainin business?
Chapter 3 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 3 - Need for a Statement of Cash Flows. The accrual...Ch. 3 - Articulation of the Statement of Cash Flows with...Ch. 3 - Classification of Interest Expense. Under U.S....Ch. 3 - Prob. 4QECh. 3 - Classification of Changes in Short-Term Financing....Ch. 3 - Classification of Cash Flows Related to...Ch. 3 - Treatment of Non-Cash Exchanges. The acquisition...Ch. 3 - Computing Cash Collections from Customers....Ch. 3 - Computing Cash Payments to Suppliers. Lowes...Ch. 3 - Computing Cash Payments for Income Taxes. Visa...
Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting the Statement of Cash Flows. The...Ch. 3 - Interpreting the Statement of Cash Flows. Texas...Ch. 3 - Interpreting the Statement of Cash Flows. Tesla...Ch. 3 - Interpreting the Statement of Cash Flows. Gap Inc....Ch. 3 - Prob. 19PCCh. 3 - Prob. 20PCCh. 3 - Interpreting the Statement of Cash Flows....Ch. 3 - Extracting Performance Trends from the Statement...Ch. 3 - Interpreting a Direct Method Statement of Cash...Ch. 3 - Prob. 24PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 26PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 1AICCh. 3 - Prob. 1BICCh. 3 - Prob. 1CICCh. 3 - Prob. 1DICCh. 3 - Prob. 1EICCh. 3 - Prob. 1FICCh. 3 - Prob. 1GICCh. 3 - Prob. 1HICCh. 3 - Prob. 2AICCh. 3 - Prob. 2BICCh. 3 - Prob. 2CICCh. 3 - Prob. 2DICCh. 3 - Prob. 2EICCh. 3 - Prob. 2FICCh. 3 - Prob. 3IC
Knowledge Booster
Similar questions
- Interpreting the Statement of Cash Flows. Tesla Motors manufactures high performance electric vehicles that are extremely slick looking. Exhibit 3.20 presents the statement of cash flows for Tesla Motors for 20102012. REQUIRED Discuss the relations among net income, cash flows from operations, cash flows from investing activities, and cash flows from financing activities for the firm over the three-year period. Describe what stage of life cycle these relations suggest for Tesla Motors. Why are negative operating cash flows less than the net losses? Where is Tesla obtaining cash, and what are theydoing with it? What do you think will happen with cash flows in 2013?arrow_forwardIndicate how you would expect the following strategies to affect the company’s net cash flows from operating activities (1) in the near future and (2) in later periods (after the strategy’s long-term effects have “taken hold”). Fully explain your reasoning. a. A successful pharmaceutical company substantially reduces its expenditures for research anddevelopment.b. A restaurant that previously sold only for cash adopts a policy of accepting bank credit cards,such as Visa and MasterCard.c. A manufacturing company reduces by 50 percent the size of its inventories of raw materials(assume no change in inventory storage costs).d. Through tax planning, a rapidly growing real estate developer is able to defer significantamounts of income taxes.e. A rapidly growing software company announces that it will stop paying cash dividends for theforeseeable future and will instead distribute stock dividends.arrow_forwardSantana Ray, ownrt of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. Computer service revenue. 25,007 Net sales 18,393 Total revenue 43 400 Cost of goods sold 14,152 Depreciation expense-office equipment 390 Depreciation expense-Computer equipment 1,230 Wages expense 2,750 Insurance expense 515 Rent expense 2,175 Computer supplies expense 1,305 Advertising expense 570 Mileage expense 260 Repairs expense-Computer 930 Total expenses 24,277 Net Income 19,123arrow_forward
- Using Statementsof Cash Flows John Marshall is employed as a bank loan officer for First State Bank. He is comparing twocompanies that have applied for loans, and he wants your help in evaluating those companies. Thetwo companies—Morris, Inc., and Walker Company—are approximately the same size and hadapproximately the same cash balance at the beginning of 2009. Because the total cash flows for thethree-year period are virtually the same, John is inclined to evaluate the two companies as equal interms of their desirability as loan candidates.Abbreviated information (in thousands of dollars) from Morris, Inc., and Walker Company is as follow: Morris, Inc. Walker Company 2009 2010 2011 2009 2010 2011Cash flows from:Operating activities $10 $13 $15 $ 8 $3 $(2)Investing activities:…arrow_forwardFor the Sears Company, provide a brief detail how the company remains open after burning through over $6 billion in cash over four years just to keep the doors open For the Disney statement, where is their cash coming from and where are they spending the cash? (What are the major uses of cash outside of operations.)arrow_forwardSantana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $ 24,707 Net sales 18,393 Total revenue 43,100 Cost of goods sold $ 14,552 Depreciation expense—Office equipment 350 Depreciation expense—Computer equipment 1,230 Wages expense 3,050 Insurance expense 515 Rent expense 1,775 Computer supplies expense 1,235 Advertising expense 530 Mileage expense 260 Repairs expense—Computer 910 Total expenses 24,407 Net income $ 18,693 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2019, and March 31, 2020 Mar. 31, 2020 Dec. 31, 2019 Assets Cash $ 75,427 $ 56,252…arrow_forward
- DeliverItNow is a start-up operating in mid to large cities in the Eastern United States that coordinates food deliveries to businesses and individuals in a limited geographic area. Here is their Cash Flow Statement for the most recent quarter: 1. What is the Cash Flow from Operating Activities for DeliverItNow for the last 3 months? 2.Which of the following changes would be true about DeliverItNow?: Their revenues are negative Their revenues are greater than their expenses Their expenses are greater than their revenues Operations are generating positive cash flow None of the above. 3. What is DeliverItNow's Cash Flow from Investing Activities? 4. What is DeliverItNow's Net Cash Flow? 5. If DeliverItNow's Chief Financial Officer (CFO) was concerned about the company's negative cash flow and decided to sell shares of stock to make up the difference, how many shares would the company need to sell at a cost of $100 / share? 6. Why would a start-up company like DeliverItNow be likely to…arrow_forwardA company had the following cash flows for the year: (a) Purchased inventory, $60,000 (b) Sold goods to customers, $90,000 (c) Received loan from a local bank, $150,000 (d) Purchased land, $180,000 (e) Purchased treasury stock, $40,000 (f) Paid dividends, $10,000 (g) Sold delivery truck, $30,000 What amount would be reported for net investing cash flows on the Statement of Cash Flows (for a negative number put a minus in front of the number)?arrow_forwardDirection: Study the given data below and compute for (1) the cash generated/used in financing activities, (2) the net change in cash for the year, and (3) prepare the CFS for the year. Learning is Fun Company has presented the following in order to aid the account in preparing CFS during the month. Net income: P200, 000 Depreciation expense: P25, 000 Gain on sale on property and equipment: P100. 000 Decrease in trade and other receivables: P 70, 000 Purchase of property and equipment: P200, 000 Payment of loan from bank: P150, 000 Compute for the cash generated/used in financing activities. Based on the given above, compute for the net change in cash for the year.arrow_forward
- asap A company had the following cash flows for the year: (a) Purchased inventory, $60,000 (b) Sold goods to customers, $90,000 (c) Received loan from a local bank, $150,000 (d) Purchased land, $180,000 (e) Purchased treasury stock, $40,000 (f) Paid dividends, $10,000 (g) Sold delivery truck, $30,000 What amount would be reported for net investing cash flows on the Statement of Cash Flows (for a negative number put a minus in front of the number)?arrow_forwardBety Corp bought a machine used in production for $100,000 and paid for it through the issuance of a long-term note accepted by the seller, Sigma Inc. What component of the statement of cash-flows of Bety was affected ? Select all that apply. A)Total operating cashflows. B)Total investing cashflows. C)Total financing cashflows D)Neither total operating, total investing nor total financing cash-flows will be affected.arrow_forwardWhat are the three types of cash flows reported in the statement of cash flows? Give an example of each type of activity for a company like Oakley, Inc., a designer, manufacturer, and distributor of high-performance eyewear, footwear, watches, and athletic equipment.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning