b. Use a negative sign with cash outflow answers. WOLFF COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Cash Flow from Operating Activities Net Income 56.000 v Add (deduct) items to convert net income to cash basis Depreciation 17,000 Accounts Receivable Increase (9.000) v Inventory (30.000) Increase Prepaid Insurance Decrease 2,000 v Accounts Payable Decrease (3.000) v Wages Payable Increase 3,000 v Income Tax Payable Decrease (1,000) Cash Flow Provided by Operating Activities 35,000 v Cash Flow from Investing Activities Purchase of Plant Assets (55.000) Cash Flow from Financing Activities Issuance of Bonds Payable 55,000 v Payment of Dividends (29.000) Cash Provided by Financing Activities 26,000 v Ne: Change in Cash 6.000 v Cash at Beginning of Year 5,000 v Cash at End of Year 11,000 c. Free cash flow S (20,000) d. Operating-cash-flow-to-current-liabilities ratio. Round answer to two decimal places. 1.49

b. Use a negative sign with cash outflow answers. WOLFF COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Cash Flow from Operating Activities Net Income 56.000 v Add (deduct) items to convert net income to cash basis Depreciation 17,000 Accounts Receivable Increase (9.000) v Inventory (30.000) Increase Prepaid Insurance Decrease 2,000 v Accounts Payable Decrease (3.000) v Wages Payable Increase 3,000 v Income Tax Payable Decrease (1,000) Cash Flow Provided by Operating Activities 35,000 v Cash Flow from Investing Activities Purchase of Plant Assets (55.000) Cash Flow from Financing Activities Issuance of Bonds Payable 55,000 v Payment of Dividends (29.000) Cash Provided by Financing Activities 26,000 v Ne: Change in Cash 6.000 v Cash at Beginning of Year 5,000 v Cash at End of Year 11,000 c. Free cash flow S (20,000) d. Operating-cash-flow-to-current-liabilities ratio. Round answer to two decimal places. 1.49

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The following are goals‘and objectives in working-capital management. Which is the LEAST ACCURATE?…

A: Working capital is the capital required for the day-to-day operation of the business. If this amount…

Q: How can we determine the Cash Flow Statement with only Operating and Investing Activities?

A: Cash flow statements are the statements that determine the inflow and outflow of cash from three…

Q: What information can a statement of cash flows provide about a company’s financingactivities that…

A: Cash flow statement: A type of financial statement which shows the cash position of a business by…

Q: Which of the following is a stronger indicator of cash flow flexibility?A. cash flow from operating…

A: Cash is very important current asset for the business. Cash flows can be cash inflows and cash…

Q: what are the major advantages of the indirect method of reporting cash flow from operating…

Q: Determine cash flows from operating activities by the indirect method.

Q: Describe similarities between the indirect and the direct method of te statement of cash flow.…

A: Cash flow Statement-It is a statement that shows inflows and outflows of the cash and cash…

Q: We can separate cash return on assets into: a. Cash flow to sales and return on assets. b. Profit…

A: Cash return on assets is: = Cash flows / Average Assets

Q: What are net operating loss carryforwards and how can they provide cash savings?

Q: What is cash conversion cycle and how is it different from operating cycle?

A: Cash conversion cycle: It is a way that helps a company to determine how much it requires to convert…

Q: In a few sentences, answer the following question as completely as you can. What are the four…

A: A cash flow statement is a financial statement that provides information about a company's cash…

Q: How can we Share Cash Flow from Operations?

A: Cash Flow from Operations is the cash flows from principal revenue generating activities of an…

Q: a) Define both Financing Cash Flows and Investing Cash Flows. b) For Financing Cash Flows, explain…

A: Cash flow from financing activities (CFF) is a section of a company’s cash flow statement, which…

Q: How can we estimate the profits (more precisely, the cash nows) that the assets will generate during…

A: It is a process of acquiring an approximation or projection or forecast of a firm’s future budgetary…

Q: Which of the following items are included in calculating Firm Free Cash Flow? I. Cost of goods sold…

A: Cash flows refer to the payments that are made in or out of the business, it takes into account the…

Q: Which of the following is an advantage of the cash payback method? a. takes into consideration…

A: The objective of the question is to identify the advantage of the cash payback method among the…

Q: . which cash flow method presentation is easier to understand: direct or indirect? b. explain the…

A: This question require us to answer which method is easy for presentation and explanation of three…

Q: The primary formula for calculating operating cash flow is?

A: Cash flow from operating activities refers to the amount of cash generated by the operating…

Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

I need to find the Free Cash Flow for Wolff Company Indirect Method.

b. Use a negative sign with cash outflow answers.
WOLFF COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash Flow from Operating Activities
Net Income
56,000
Add (deduct) items to convert net income to cash basis
Depreciation
17,000
Accounts Receivable
(9,000) v
Increase
Inventory
Increase
(30,000)
Prepaid Insurance
Decrease
2,000 v
Accounts Payable
Decrease
(3,000)
Wages Payable
Increase
3,000 v
Income Tax Payable
Decrease
(1,000)
Cash Flow Provided by Operating Activities
35,000 v
Cash Flow from Investing Activities
Purchase of Plant Assets
(55,000)
Cash Flow from Financing Activities
Issuance of Bonds Payable
55,000
Payment of Dividends
(29,000) v
Cash Provided by Financing Activities
26,000
Net Change in Cash
6,000
Cash at Beginning of Year
5,000 v
Cash at End of Year
11,000 v
c. Free cash flow $ (20,000)
d. Operating-cash-flow-to-current-liabilities ratio.
Round answer to two decimal places.
1.49
>

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How can we determine the Cash flows associated with producing products?
The cash flow cycle also is known as the: Select one: a. cash conversion cycle. b. cash-to-cash cycle. c. working capital cycle. d. revolving credit cycle.
Is cash flow more reliable than accounting profit? Which one is more useful?
Would the move to a JIT system have a one-time or recurring impact on operating cash flow?
What are the major advantages of the indirect method of reporting cash flows from operating activities?
What are some tools that companies have to manage their (net operating) working capital? Provide examples of inventory and receivables management techniques. What is the Cash Conversion Cycle and why is this a useful metric? Are there risks if this is too low?
How can we show mathematically that the two approaches cash flow from operation and net income are identical?
Which is easier to calculate Multiple Choice A firm's Net Income A firm's Cash Flow
The two approaches to reporting cash flows provided by operating activities are the a. the liquidity and profitability methods. b. the basic and standard methods. c. direct and indirect methods. d. the gross margin and contribution margin methods.
Why, in most cases, accrual-basis net income provides a better measure of perfomance than net operating cash flow?
Explain in detail with examples of different methods for cash transactions, and the costs associated with each. Provide brief justification on how these costs can be reduced?