Product life cycle: Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase. Introductory phase: In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative. Growth phase: In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities. Maturity phase: In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock. Decline phase: In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments. To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

20-31 EOQ, uncertainty, safety stock, reorder point. Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $360 per order. The annual carrying cost is $6.50 per motor. It cur- rently takes 2 weeks to supply an order to the assembly plant. 1. What is the optimal number of motors that Phillips's managers should order according to the EOQ model? 2. At what point should managers reorder the motors, assuming that both demand and purchase-order lead time are known with certainty? 3. Now assume that demand can vary during the 2-week purchase-order lead time. The following table shows the probability distribution of various demand levels: Required Total Demand for Motors for 2 Weeks 1,600 1,800 2,000 2,200 Probability of Demand (sums to 1) 0.05 0.20 0.50 0.20 0.05 2,400 If Phillips runs out of stock, it would have to rush order the motors at an…

None

Mecca Copy, a photocopying center located on University Avenue, provided the following data to prepare a budgeted balance sheet for next year. Cash Accounts receivable Supplies inventory Equipment Accumulated depreciation Accounts payable Common stock Retained earnings Ending Balances ? $ 8,200 $ 3,200 $ 34,500 $ 14,000 $ 1,900 $ 5,000 ? The beginning balance of retained earnings was $29,000, budgeted net income is $12,700, and budgeted dividends are $2,500. Required: Prepare the company's budgeted balance sheet. Note: Amounts to be deducted should be indicated by a minus sign.

Answer 2

Question

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Answer 6

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

Answer 7

Chapter 12, Problem 12.8BE

(a)

To determine

Product life cycle:

Every corporation in its operational life cycle has to pass through various phases known as “Product life cycle”. There are various stages of product life cycle like introductory phase, Growth phase, maturity phase and decline phase.

Introductory phase:

In this stage, there will be negative cash flow from operations as the cash is used in operations will be higher than the cash provided by the business operations. The cash flow from the activities like operating activities, investing activities will be negative.

Growth phase:

In this stage, the company generates certain amount of cash for running the business operations. In this stage, the net income will be higher than the cash flow from operating activities.

Maturity phase:

In this stage, the volume of sales will be at its highest peak. In this stage, net income and cash flow from operating activities will be almost similar. The cash flow from operating activities will be higher. Therefore the company will plan to pay dividends to its shareholders’ or redeem a debt or even plan for buyback of its stock.

Decline phase:

In this stage, the profits and volume of sales starts to decline or decrease. The cash flow from operating activities also decreases. Therefore the cash flow from financing activities might be negative as it pays for dividend and buy back of stock. But cash flow from investing activities might be positive as the company would try to increase its cash inflow by way of selling its assets and investments.

To explain: The reason why the cash provided by operating activities likely to be lower than net income during the growth phase.

Answer 8

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Answer 9

(b)

To determine

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 13

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Why is it necessary to use comparative balance...Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

Solution Summary: The author explains that every corporation in its operational life cycle passes through various stages like introductory, growth, maturity, and decline phases.

To explain: The reason why the net cash from investing activities are positive during late maturity phase and during decline phase.

Want to see the full answer?

Chapter 12 Solutions