annotated-three_cash_flows_completed%20assignment.docx
pdf
keyboard_arrow_up
School
University Of Chicago *
*We aren’t endorsed by this school
Course
20100
Subject
Finance
Date
Feb 20, 2024
Type
Pages
6
Uploaded by BailiffRabbitPerson818
Company A
2017
2016
2015
Major sources of cash
Inventories, deferred income
taxes, proceeds from sale of
property and investments,
proceeds from business unit,
proceeds from sales of
receivables, proceeds from
debt issuances, increase in
short-term borrowings,
proceeds from sale leaseback
financing
Inventories, proceeds from
sale of property and
investments, proceeds from
debt issuances, proceeds from
sale leaseback financing
Proceeds from sale of
property and investments,
increase in short-term
borrowings, proceeds from
sale leaseback financing
Major uses of cash
accounts payable, operating
activities, debt repayment,
debt issuance cost, PPE
purchases
deferred income taxes,
accounts payable, operating
activities, debt repayment,
decrease in short-term
borrowings, PPE purchases,
debt issuance cost
deferred income taxes,
inventories, operating
activities, PPE purchases,
debt repayment, debt issuance
cost
CFO > NI?
no
yes
no
Major reasons for difference
between CFO and NI
tax valuation allowance, gain
on sale of assets
tax valuation allowance,
inventories
gain on sale of assets,
deferred income taxes
Is CFO > Capex?
No
No
No
Is CFO > Capex + Dividends?
no
no
no
If CFO < Capex + Dividends,
how did the company finance
Capex + Dividends?
Yes; the company financed
their capital expenditures and
dividends through proceeds
from their investing activities
(sales of property and
investments, receivables etc.)
Yes; the company financed
their capital expenditures and
dividends through proceeds
from their investing activities
and their financing activities
(debt issuances)
Yes; the company financed
their capital expenditures and
dividends through proceeds
from their investing activities
Trend in Net Income
Net income reduced from 2015 to 2016 but increased from 2016 to 2017. It has increased
overall from 2015 to 2017
Trend in CFO
CFO increased from 2015 to 2016 but fell from 2016 to 2017, it has increased overall
Trend in Capex
Gross Capex declined over the 3 years, and net Capex fell from 2015 to 2016 and increased
from 2016 to 2017 but declined overall across the three years
Trend in major working capital
accounts
Cash inflow from inventories increased over the three years which means the inventory
account amounts fell over the three years. Accounts payable also fell over the three years.
Total working capital increased over the three years
Overall assessment of the
financial strength of the company
Firstly, the company has a negative CFO for all three years and because of the year-to-year
fluctuations there isn’t much of an indication of an upward trend. A negative CFO would be
normal for a young company - however, the company has a net negative CFF for 2015 and
2017 and had more debt repayment than issuance in 2017 (the most recent year). This is
indicative of a declining company. Furthermore, the company’s CFI is positive for all three
years. It is selling off more of its PPE than it is acquiring which is also indicative of a company
in the later stages of its life. This also shows that the company is selling its long term assets to
fund its operations which demonstrates declining operations and a weak financial situation.
Therefore, on a 1 to 5 scale I would give the company a 2.
CFO = Cash flow from operating activities; NI = Net Income; Capex = Capital expenditures, i.e. investments into long-lived assets
Major working capital accounts: Accounts Receivable, Inventory, Accounts Payable
Company B
2018
2017
2016
Major sources of cash
stock-based compensation
expense, accounts payable,
proceeds of stock issuance,
proceeds from exercise of
stock options
Remeasurement of preferred
stock warrant liability,
stock-based compensation
expense, accrued liabilities,
accounts payable
inventory reserves,
stock-based compensation
expense, accounts payable,
accrued liabilities
Major uses of cash
Remeasurement of preferred
stock warrant liability,
inventory, prepaid expenses,
purchase of property and
equipment
Deferred income taxes,
inventory, prepaid expenses,
purchase of property and
equipment
Deferred income taxes,
inventory, prepaid expenses,
purchase of property and
equipment
CFO > NI?
yes
yes
yes
Major reasons for difference
between CFO and NI
stock-based compensation
expense, proceeds from stock
issuance, depreciation and
amortization
Remeasurement of preferred
stock warrant liability,
stock-based compensation
expense, accrued liabilities
inventory reserves,
stock-based compensation
expense, accounts payable,
accrued liabilities
Is CFO > Capex?
yes
yes
yes
Is CFO > Capex + Dividends?
yes
yes
yes
If CFO < Capex + Dividends,
how did the company finance
Capex + Dividends?
No; the company financed
their Capex + dividends
through operating and
financing activities
No; the company financed
their Capex + dividends
through operating activities
No; the company financed
their Capex + dividends
through operating activities
Trend in Net Income
Net income decreased from 2016 to 2017 and then increased in 2018, but increased overall
Trend in CFO
CFo also decreased from 2016 to 2017 and then increased in 2018, but increased overall
Trend in Capex
Capex increased from 2016 to 2017 then decreased in 2018 and increased overall but was
largely constant through the years
Trend in major working capital
accounts
The amount in the inventory account increased on the cash flow statement year-to-year across
the three years which means the actual amount decreased across the three years. Prepaid
expenses increased and then decreased on the cash statement, as did accrued liabilities.
Accounts payable decreased and then increased which means in the most recent year the
company bought more on credit than before
Overall assessment of the
financial strength of the company
The company’s CFO indicates inflow and increased by nearly 60% over the three years, which
means the company’s core business activities are fairly profitable and is a sign of financial
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
strength. Furthermore, the steady Capex outflow indicates a growing company, though
investing activities do not seem to be increasing. The cash inflow from financing - especially
the large amount in the most recent year - also indicates a company trying to expand its
resources. Within this context, the company saw a net increase in cash across the three years,
which also signifies financial strength. Therefore, I would give this company a 5 on the scale.
CFO = Cash flow from operating activities; NI = Net Income; Capex = Capital expenditures, i.e. investments into long-lived assets
Major working capital accounts: Accounts Receivable, Inventory, Accounts Payable
Company C
2018
2017
2016
Major sources of cash
stock-based compensation,
accounts payable, proceeds
from property and equipment
incentives, sales and
maturities of marketable
securities, proceeds from
long-term debt and other
stock-based compensation,
accounts payable, accrued
expenses and other, unearned
revenue, proceeds from
property and equipment
incentives, sales and
maturities of marketable
securities
stock-based compensation,
accounts payable, unearned
revenue, sales and maturities
of marketable securities
Major uses of cash
inventories, accounts
receivable, purchases of
property and equipment,
acquisitions, purchases of
marketable securities,
repayments of debt
inventories, accounts
receivable, purchases of
property and equipment,
purchases of marketable
securities, repayments of debt
inventories, accounts
receivable, purchases of
property and equipment,
purchases of marketable
securities, repayments of debt
CFO > NI?
no
yes
no
Major reasons for difference
between CFO and NI
purchases of property and
equipment, acquisitions,
purchases of marketable
securities, repayments of debt
purchases of property and
equipment, purchases of
marketable securities,
repayments of debt
purchases of property and
equipment, purchases of
marketable securities,
repayments of debt
Is CFO > Capex?
no
yes
yes
Is CFO > Capex + Dividends?
no
yes
yes
If CFO < Capex + Dividends,
how did the company finance
Capex + Dividends?
yes; the company used
operating and financing
activities to finance capex +
dividends
no; the company used
operating activities to finance
capex + dividends
no; the company used
operating activities to finance
capex + dividends
Trend in Net Income
increased over the three years
Trend in CFO
increased over the three years
Trend in Capex
increased over the three years
Trend in major working capital
accounts
Inventory accounts decreased over the three years, which means their actual total amounts
increased over the three years. Same trend with accounts receivable. Accounts payable
increased over the three years which means the company bought more on credit of the three
years
Overall assessment of the
financial strength of the company
Increase in CFO across the three years suggests that the company’s core operations are
profitable and is a sign of financial strength. Furthermore, the cash outflow from investing
activities increased across the three years which is a sign of an expanding company. However,
the cash outflow from the financing activities for 2015 and 2016 suggests more debt
repayment than debt issuance which is somewhat at odds with the previous two metrics - both
of which suggest a young, growing company. Still, there was a net cash inflow from financing
in 2017 which is in line with the aforementioned image of the company. Overall, I would give
the company a 3 on the scale.
CFO = Cash flow from operating activities; NI = Net Income; Capex = Capital expenditures, i.e. investments into long-lived assets
Major working capital accounts: Accounts Receivable, Inventory, Accounts Payable
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Given the data in the following table, what was net cash flow from investing activities for 2023?
arrow_forward
Boston Accounting Services provides accounting services to small businesses. The following data
relate to the preparation of a master budget for January 2017.
1. At the end of 2016, the company's general ledger indicated the following balances:
Cash
Accounts receivable
Equipment (net)
Total
$ 62,000
48,000
80,000
$190,000
Accounts payable
Note payable
Common stock
Retained earnings
$ 40,000
10,000
50,000
90,000
$190,000
2. Revenue in December 2016 was $80,000, and revenue budgeted for January 2017 is
$70,000.
3. Forty percent of revenue is collected in the month earned, and 60 percent is collected in
the subsequent month. The receivable balance at the end of 2016 reflects revenue earned in
December 2016.
4. Monthly expenses (excluding interest expense) are budgeted as follows: salaries,
$50,000; rent, $3,000; depreciation of equipment, $3,000; utilities, $1,000; other,
$2,000.
REQUIRED
Complete the following budgets:
5. Expenses are paid in the month incurred. Purchases of equipment…
arrow_forward
25 please
arrow_forward
RITTER CORPORATION
Income Statement
Revenue
Expenses
Depreciation
Net income
Dividends
2019
Assets
Cash
Other current assets
Net fixed assets
Total assets
Liabilities and Equity
Accounts payable
Long-term debt
Stockholders' equity
C.
RITTER CORPORATION
Balance Sheets
December 31
Total liabilities and
equity
$780
580
93
$ 107
$ 87
2018
$ 58
168
373
$599
$ 118
143
338
$599
a.
Change in cash
b. Change in net working capital
Cash flow from assets
2019
$ 71
176
393
$640
$ 131
151
358
a. What is the change in cash during 2019?
b. Determine the change in net working capital in 2019.
c. Determine the cash flow generated by the firm's assets during 2019.
$640
$
$
13
8
arrow_forward
Category
Accounts payable
Accounts receivable
Accruals
Additional paid in capital
Cash
Common Stock
COGS
Current portion long-term debt
Depreciation expense
Interest expense
Inventories
Long-term debt
Net fixed assets
Notes payable
Operating expenses (excl. depr.)
Retained earnings
Sales
Taxes
Prior Year Current Year
???
???
320,715
397,400
40,500
33,750
500,000
541,650
17,500
47,500
94,000
105,000
328,500
431,876.00
33,750
35,000
54,000
54,402.00
40,500 42,823.00
279,000 288,000
339,660.00 398,369.00
946,535
999,000
148,500
162,000
126,000
162,881.00
306,000 342,000
639,000 847,928.00
24,750
47,224.00
What is the current year's return on assets (ROA)?
Submit
Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format
rounded to 4 decimal places (ex: 0.0924))
arrow_forward
Free Cash Flows
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2018
2017
Sales
$7,800.0
$6,000.0
Operating costs excluding depreciation
5,850.0
5,100.0
Depreciation and amortization
216.0
180.0
Earnings before interest and taxes
$1,734.0
$720.0
Less Interest
168.0
129.0
Pre-tax income
$1,566.0
$591.0
Taxes (40%)
626.4
236.4
Net income available to common stockholders
$939.6
$354.6
Common dividends
$846.0
$284.0
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2018
2017
Assets
Cash
$90.0
$72.0
Short-term investments
39.0
30.0
Accounts receivable
975.0
780.0
Inventories
1,512.0
1,260.0
Total current assets
$2,616.0
$2,142.0
Net plant and equipment
2,160.0
1,800.0
Total assets
$4,776.0
$3,942.0
Liabilities and Equity
Accounts payable
$468.0
$360.0
Accruals
345.0
300.0
Notes payable
156.0
120.0
Total current…
arrow_forward
Problem No. 1. Cash Flow from Operating
Activities:
Profit and Loss Account for the year ended 31st
December 2011
Particulars
Sales
Interest Earned
Total Income
Material Consumed
Other expenses
Loss on sale of asset
Depreciation
Amount in Million
(Rs.)
Interest & Finance Charges
Profit before Tax
Provision for income tax
Profit after tax
Balance Sheet Excerpts as 31st December,
on
2011
Inventories
Sundry Debtors/Acc. Rec
Sundry Creditors/Acc. Pay
Provision for tax
487.23
58.45
545.68
246.45
133.18
33.45
93.34
82.11
-42.85
0
-42.85
67.33
96.56
84.78
31st December,
2010
이
45.30
112.65
94.33
4.80
arrow_forward
CALCULATE CASH FLOW TO CREDITOR'S FOR fy24
arrow_forward
Use the information below to compute the cash flow assets: please give me answer this general accounting question
arrow_forward
Find return on financial leverage and return of financial leverage ratio for years 2017, 2018, and 2019.
arrow_forward
Prepare the Cash Flow for the year 2021
arrow_forward
what is total current assets for capital for years 2021 back to 2017?
arrow_forward
GIVE THE COMPARATIVE BALANCE SHEET HORIZONTAL ANALYSIS FROM THE GIVEN BALANCE SHEET BELOW
JOLLIBEE BALANCE SHEET
ASSETS
ITEM
2016
2017
2018
2019
2020
Cash & Short Term Investments
17.46B
22.52B
24.17B
23.02B
57.46B
Cash & Short Term Investments Growth
-
28.99%
7.32%
-4.75%
149.59%
Cash Only
16.73B
21.11B
23.29B
20.89B
21.36B
Short-Term Investments
726M
1.41B
883.2M
2.13B
36.1B
Cash & ST Investments / Total Assets
23.96%
25.08%
16.06%
12.28%
27.26%
Total Accounts Receivable
3.59B
4.02B
4.86B
5.91B
7.05B
Total Accounts Receivable Growth
-
11.86%
21.04%
21.46%
19.36%
Accounts Receivables, Net
3.03B
3.39B
4.41B
5.37B
5.8B
Accounts Receivables, Gross
3.61B
4.08B
5.09B
5.76B
6.46B
Bad Debt/Doubtful Accounts
(579.79M)
(690.12M)
(676.91M)
(392.36M)
(658.63M)
Other Receivable
562.75M
630.06M
451.73M
536.62M
1.25B…
arrow_forward
calculate working capitalsource and application fund
arrow_forward
Calculate the EFN, external financing needed.
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you

Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Related Questions
- Given the data in the following table, what was net cash flow from investing activities for 2023?arrow_forwardBoston Accounting Services provides accounting services to small businesses. The following data relate to the preparation of a master budget for January 2017. 1. At the end of 2016, the company's general ledger indicated the following balances: Cash Accounts receivable Equipment (net) Total $ 62,000 48,000 80,000 $190,000 Accounts payable Note payable Common stock Retained earnings $ 40,000 10,000 50,000 90,000 $190,000 2. Revenue in December 2016 was $80,000, and revenue budgeted for January 2017 is $70,000. 3. Forty percent of revenue is collected in the month earned, and 60 percent is collected in the subsequent month. The receivable balance at the end of 2016 reflects revenue earned in December 2016. 4. Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $50,000; rent, $3,000; depreciation of equipment, $3,000; utilities, $1,000; other, $2,000. REQUIRED Complete the following budgets: 5. Expenses are paid in the month incurred. Purchases of equipment…arrow_forward25 pleasearrow_forward
- RITTER CORPORATION Income Statement Revenue Expenses Depreciation Net income Dividends 2019 Assets Cash Other current assets Net fixed assets Total assets Liabilities and Equity Accounts payable Long-term debt Stockholders' equity C. RITTER CORPORATION Balance Sheets December 31 Total liabilities and equity $780 580 93 $ 107 $ 87 2018 $ 58 168 373 $599 $ 118 143 338 $599 a. Change in cash b. Change in net working capital Cash flow from assets 2019 $ 71 176 393 $640 $ 131 151 358 a. What is the change in cash during 2019? b. Determine the change in net working capital in 2019. c. Determine the cash flow generated by the firm's assets during 2019. $640 $ $ 13 8arrow_forwardCategory Accounts payable Accounts receivable Accruals Additional paid in capital Cash Common Stock COGS Current portion long-term debt Depreciation expense Interest expense Inventories Long-term debt Net fixed assets Notes payable Operating expenses (excl. depr.) Retained earnings Sales Taxes Prior Year Current Year ??? ??? 320,715 397,400 40,500 33,750 500,000 541,650 17,500 47,500 94,000 105,000 328,500 431,876.00 33,750 35,000 54,000 54,402.00 40,500 42,823.00 279,000 288,000 339,660.00 398,369.00 946,535 999,000 148,500 162,000 126,000 162,881.00 306,000 342,000 639,000 847,928.00 24,750 47,224.00 What is the current year's return on assets (ROA)? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))arrow_forwardFree Cash Flows Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $7,800.0 $6,000.0 Operating costs excluding depreciation 5,850.0 5,100.0 Depreciation and amortization 216.0 180.0 Earnings before interest and taxes $1,734.0 $720.0 Less Interest 168.0 129.0 Pre-tax income $1,566.0 $591.0 Taxes (40%) 626.4 236.4 Net income available to common stockholders $939.6 $354.6 Common dividends $846.0 $284.0 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash $90.0 $72.0 Short-term investments 39.0 30.0 Accounts receivable 975.0 780.0 Inventories 1,512.0 1,260.0 Total current assets $2,616.0 $2,142.0 Net plant and equipment 2,160.0 1,800.0 Total assets $4,776.0 $3,942.0 Liabilities and Equity Accounts payable $468.0 $360.0 Accruals 345.0 300.0 Notes payable 156.0 120.0 Total current…arrow_forward
- Problem No. 1. Cash Flow from Operating Activities: Profit and Loss Account for the year ended 31st December 2011 Particulars Sales Interest Earned Total Income Material Consumed Other expenses Loss on sale of asset Depreciation Amount in Million (Rs.) Interest & Finance Charges Profit before Tax Provision for income tax Profit after tax Balance Sheet Excerpts as 31st December, on 2011 Inventories Sundry Debtors/Acc. Rec Sundry Creditors/Acc. Pay Provision for tax 487.23 58.45 545.68 246.45 133.18 33.45 93.34 82.11 -42.85 0 -42.85 67.33 96.56 84.78 31st December, 2010 이 45.30 112.65 94.33 4.80arrow_forwardCALCULATE CASH FLOW TO CREDITOR'S FOR fy24arrow_forwardUse the information below to compute the cash flow assets: please give me answer this general accounting questionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning

Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning