What is Avett Inc.'s 2020 Cash Flows from Financing Activities? CONSOLIDATED BALANCE SHEET(in millions)Year EndingDec. 3120202019ASSETSCash and Cash Equivalents$1,000$800Accounts Receivable300500Merchandise Inventory880650Short Term Investments145120TOTAL CURRENT ASSETS2,3252,070PP&E, net accumulated depreciation of$600 in 2020 and $500 in 20191,2501,000TOTAL ASSETS$3,575$3,070LIABILITIESAccounts PayableOther Payables$530$500410362TOTAL CURRENT LIABILITIES940862Mortgage PayableLong-Term Bank Loan700900850TOTAL LIABILITIES1,8402,412OWNERS EQUITYCommon Stock8070Preferred StockAdditional Paid in CapitalRetained EarningsTOTAL OWNERS EQUITY2902501,3651,735338658TOTAL LIABILITIES + OWNERS EQUITY$3,575$3,070 CONSOLIDATED INCOME STATEMENT(in millions)December 31, 2020$20,000(10,000)(10,000)(8,000)2,000(500)$1,500RevenuesCost of Goods SoldProfit MarginSG&APre-Tax IncomeТах ExpenseNet IncomeAdditional Information> No Property, Plant & Equipment (PPE) was sold during 2020.> No short-term investments were sold during the year.> All depreciation expense is included in SG&A> Because there is no dividends payable account at either the start of end of the year, you mayassume all dividends declared in 2020 were paid in 2020.Тo Do> Complete the 2020 Cash Flow Statement on the following page.Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement.Hint #1 PPE: Remember to evaluate changes in gross PPE separate from changes in accumulateddepreciation. Recall gross PPE less accumulated depreciation equals net PPE.Hint #2 Stock Issuance: Remember the total change in cash due to stock issuances/repurchases is the sumof the change in common stock (stated par value) and additional paid in capital (APIC).

The statement of cash flow (CFS) is prepared by the management for representing the detailed…

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Business

Accounting

What is Avett Inc.'s 2020 Cash Flows from Financing Activities?

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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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

What is Avett Inc.'s 2020 Cash Flows from Financing Activities?

CONSOLIDATED BALANCE SHEET
(in millions)
Year Ending
Dec. 31
2020
2019
ASSETS
Cash and Cash Equivalents
$1,000
$800
Accounts Receivable
300
500
Merchandise Inventory
880
650
Short Term Investments
145
120
TOTAL CURRENT ASSETS
2,325
2,070
PP&E, net accumulated depreciation of
$600 in 2020 and $500 in 2019
1,250
1,000
TOTAL ASSETS
$3,575
$3,070
LIABILITIES
Accounts Payable
Other Payables
$530
$500
410
362
TOTAL CURRENT LIABILITIES
940
862
Mortgage Payable
Long-Term Bank Loan
700
900
850
TOTAL LIABILITIES
1,840
2,412
OWNERS EQUITY
Common Stock
80
70
Preferred Stock
Additional Paid in Capital
Retained Earnings
TOTAL OWNERS EQUITY
290
250
1,365
1,735
338
658
TOTAL LIABILITIES + OWNERS EQUITY
$3,575
$3,070

CONSOLIDATED INCOME STATEMENT
(in millions)
December 31, 2020
$20,000
(10,000)
(10,000)
(8,000)
2,000
(500)
$1,500
Revenues
Cost of Goods Sold
Profit Margin
SG&A
Pre-Tax Income
Тах Expense
Net Income
Additional Information
> No Property, Plant & Equipment (PPE) was sold during 2020.
> No short-term investments were sold during the year.
> All depreciation expense is included in SG&A
> Because there is no dividends payable account at either the start of end of the year, you may
assume all dividends declared in 2020 were paid in 2020.
Тo Do
> Complete the 2020 Cash Flow Statement on the following page.
Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement.
Hint #1 PPE: Remember to evaluate changes in gross PPE separate from changes in accumulated
depreciation. Recall gross PPE less accumulated depreciation equals net PPE.
Hint #2 Stock Issuance: Remember the total change in cash due to stock issuances/repurchases is the sum
of the change in common stock (stated par value) and additional paid in capital (APIC).

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).

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