EBK FINANCIAL REPORTING, FINANCIAL STAT
8th Edition
ISBN: 9781337003193
Author: WAHLEN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Textbook Question
Chapter 3, Problem 27PC
Preparing a Statement of Cash Flows from
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 firm’s 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.
- (1)
- 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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Finding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow.
a. Calculate the firm's net operating profit after taxes (NOPAT) for this year.
b. Calculate the firm's operating cash flow (OCF) for the year.
c. Calculate the firm's free cash flow (FCF) for the year.
d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c).
Data table
(Click on the icon here in order to copy the contents of the data table below into
a spreadsheet.)
Assets
Cash
Marketable securities
Accounts receivable
Inventories
Total current assets
Gross fixed assets
Less: Accumulated depreciation
Net fixed assets
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Notes payable
Accruals
Keith Corporation Balance Sheets
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
December 31
Income…
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
A company reports a 10% increase in its accounts payable from the last month.
D and W Co. sells its last season’s inventory to a discount store.
Yum Brands distributes dividends to its…
Accounting data are used to analyze cash flows, and this analysis is critical for decision making. Consider the following case:
J&H Corp. recently hired Jeffrey. His immediate mandate was to analyze the company. He has to submit a report on the company's operational
efficiency and estimate potential investment in working capital. He has the income statement from last year and the following information from the
company's financial reports as well as some industry averages.
• Last year, J&H Corp. reported a book value of $400 million in current assets, of which 20% is cash, 22% is short-term investments,
and the rest is accounts receivable and inventory.
• The company reported $340.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no
notes payable claims last year. There were no changes in the accounts payables during the reporting period.
• The company, however, invested heavily in plant and equipment to support its operations. It…
Chapter 3 Solutions
EBK FINANCIAL REPORTING, FINANCIAL STAT
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
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