Sweeter Enterprises Inc. has net cash flows from operating activities of $378,000. Cash flows used for investments in property, plant, and equipment totaled $76,000, of which 65% of this investment was used to replace existing capacity.a. Determine the free cash flow for Sweeter Enterprises Inc. $__________b. How might a lender use free cash flow to determine whether or not to give Sweeter Enterprises Inc. a loan? Free cash flow is often used to measure the financial strength of a business. The _________________ free cash flow that a business has, the easier it will be for the company to pay the interest on the loan and repay the loan principal. Sweeter’s free cash flow is $__________, which is very _____________________.

WORKING : PARTICULARS AMOUNT $ CASH FLOW USED IN INVESTMENT IN PPE $76,000 REPLACEMENT…

Answered: Sweeter Enterprises Inc. has net cash…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Why does the company add back depreciation to compute net cash flows from operating activities? 2. Why are there changes in accounts receivable and inventories as adjustments to net earnings. Are accounts receivable and inventories balances increasing or decreasing during the year? 3. It is reported that the company invested $572 million in property, plant, and equipment. Is this an appropriate type of expenditure for the company to make? What relation should expenditures for PPE have with depreciation expense? 4. Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1.003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash? 5. Provide an overall assessment of the company's cash flows for fiscal 2018. In the analysis, consider the sources and uses of cash.
Using indirect method, compute for the following: 1. net cash flow from operating activities 2. net cash flow from investing activities 3. net cash flow from financing activities
Smith Corporation has provided the following information: Cash sales totaled $143,000.Credit sales totaled $297,000.Cash collections from customers for services yet to be provided totaled $56,000.An $18,000 gain from the sale of property and equipment occurred.Interest income totaled $9,500. How much were Smith's operating revenues?
A machine with a cost of $138,000 and accumulated depreciation of $93,000 is sold for $54,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: Multiple Choice $54,000. $9,000. $45,000. Zero. This is a financing activity. Zero. This is an operating activity.
Cuevas Custom Cycles sold equipment for cash. The income statement shows a gain on the sale of $920. The net book value of the asset was $3,610. Which of the following statements describes the cash effect of the transaction? A positive cash flow of $2,690 from investing activities B positive cash flow of $4,530 from investing activities C negative cash flow of $2,690 from investing activities D negative cash flow of $4,530 from investing activities
Burger Palace Corporation reports a net-cash-used for investing activities of $3.4 million and a net-cash-provided by financing activities of $1.6 million. If cash increased by $1.1 million during the year, what was the net cash flow provided from operating activities? A) $0.7 million B) $2.9 million C) $3.9 million D) $6.1 million
E. True or false, buying property, plant and equipment would be considered a cash outflow from financing? F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts? G. True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would this transaction be shown in the investing activities section of the statement of cash flows?
OXia Company completes a local bank's loan application and applies for a six-month loan. 1. To evaluate whether Xia qualifies for the loan, the local bank will use the A) balance sheet to evaluate Xia Company's liquidity. B) balance sheet to evaluate Xia Company's return on assets. C) income statement to evaluate Xia Company's profitability. Dstatement of cash flows to evaluate Xia Company's solvency.
Connor Designs Company has net cash flows from operating activities of $425,000 and net cash flows used for investing activities of $65,000, of which 70% was used to purchase property, plant, and equipment. What is the free cash flow for Connor Designs? Free cash flow s
The following information was reported by three competitors: Cash flows provided (used by) operating activities Cash flows provided (used by) investing activities Proceeds from sale of plant assets Purchase of plant assets Cash flows provided (used by) financing activities Proceeds from issuance of debt Repayment of debt Net increase in cash Armor O Biloxi Armor $ (3,000) 29,000 The company(s) most capable of generating future cash flows is (are): Calliope O Armor and Biloxi (6,000) $ 20,000 Biloxi $ (5,000) 20,000 10,000 (5,000) $ 20,000 Calliope $75,000 (40,000) (15,000) $ 20,000
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