Explanation Firm 1 has high cash flow from operation and reduces its long-term borrowings. The firm has low dividend payout ratio and over-capacity in electric utility. Thus, it must be a Company P. Firm 2 is less capital intensive and reduces its long-term debt with low percentage for net income and high percentage of depreciation . Thus, Firm 2 is Company I, and firm 3 is Company C. Firm 4 has less cash for its capital expenses and finances it with the combination of equity and long-term finance. Company B has low net income because of heavy R&D expenses. Thus, firm 4 is Company B. Firm 5 shows growth in sales and generates high cash flows, which are used to repurchase its stock...

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN: 9781285190907

Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher: Cengage Learning

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Question

Chapter 3, Problem 24PC

To determine

Match the companies with the clues given in the common-size statement of cash flows.

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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. 4QE Ch. 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...

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Preparing a Statement of Cash Flows from Balance Sheets and Income Statements. BTB Electronics Inc. manufactures parts, components, and processing equipment for electronics and semiconductor applications in the communications, computer, automotive, and appliance industries. Its sales tend to vary with changes in the business cycle because the sales of most of its customers are cyclical. Exhibit 3.32 presents balance sheets for BTB as of December 31, Year 7 through Year 9, and Exhibit 3.33 presents income statements for Year 8 and Year 9. REQUIRED a. Prepare a worksheet for the preparation of a statement of cash flows for BTB Electronics Inc for Years 8 and 9. Follow the format of Exhibit 3.14 in the text. Notes to the firms financial statements reveal the following (amounts in thousands): (1) Depreciation expense was 641 in Year 8 and 625 in Year 9. No fixed assets were sold during these years. (2) Other Assets represents patents. Patent amortization was 25 in Year 8 and 40 in Year 9. BTB sold a patent during Year 9 at no gain or loss. (3) Changes in Deferred Income Taxes are operating activities. b. Discuss the relations among net income and cash flow from operations and the pattern of cash flows from operating, investing, and financing activities.

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