Working Papers, Chapters 1-17 for Warren/Reeve/Duchac’s Accounting, 27th and Financial Accounting, 15th
27th Edition
ISBN: 9781337272155
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 16, Problem 16.8BPE
a.
To determine
Free cash flow is defined as an evaluation of financial performance of a company. It shows the cash which is generated after paying on capital expenditures. Such cash is used for production, expansion, development of new products, and acquisitions.
The following formula is used to calculate free cash flow.
To Determine: D’s free cash flow for both years.
b.
To determine
To Explain: Whether free cash flow has improved or declined from Year 1 to Year 2.
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Free cash flow
Dillin Inc. reported the following on the company’s statement of cash flows in 20Y2 and 20Y1:
20Y2
20Y1
Net cash flow from operating activities
$476,200
$452,000
Net cash flow used for investing activities
(429,000)
(375,000)
Net cash flow used for financing activities
(45,000)
(59,000)
Eighty percent of the net cash flow used for investing activities was used for the purchase of property, plant, and equipment.
a. Determine Dillin’s free cash flow for both years.
20Y2
20Y1
Free cash flow
$fill in the blank 1
$fill in the blank 2
Free cash flow
Dillin Inc. reported the following on the company's statement of cash flows in 20Y2 and 20Y1:
20Y2
20Y1
Net cash flow from operating activities
$476,200
$456,200
Net cash flow used for investing activities
(429,000)
(379,000)
Net cash flow used for financing activities
(41,000)
(57,000)
Eighty percent of the net cash flow used for investing activities was used for the purchase of property, plant, and equipment.
a. Determine Dillin's free cash flow for both years.
20Y2
20Y1
Free cash flow
$
b. Has Dillin's free cash flow improved or declined from 20Y1 to 20Y2?
Cash Flow RatiosSpencer Company reports the following amounts in its annual financial statements:
Cash flow from operating activities
$90,000
Capital expenditures
$59,500*
Cash flow from investing activities
(68,000)
Average current assets
136,000
Cash flow from financing activities
(8,500)
Average current liabilities
102,000
Net income
42,500
Total assets
255,000
* This amount is a cash outflowa. Compute Spencer's free cash flow.b. Compute Spencer's operating-cash-flow-to-current-liabilities ratio.c. Compute Spencer's operating-cash-flow-to-capital-expenditures ratio.
Round ratios to two decimal points.
a. Free cash flow
Answer
b. Operating-cash-flow-to-current-liabilities ratio
Answer
c. Operating-cash-flow-to-current-expenditures ratio
Answer
Chapter 16 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac’s Accounting, 27th and Financial Accounting, 15th
Ch. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - A corporation issued 2,000,000 of common stock in...Ch. 16 - A retail business, using the accrual method of...Ch. 16 - Prob. 5DQCh. 16 - A long-term investment in bonds with a cost of...Ch. 16 - A corporation issued 2,000,000 of 20-year bonds...Ch. 16 - Fully depreciated equipment costing 50,000 is...Ch. 16 - Prob. 9DQCh. 16 - Name five common major classes of operating cash...
Ch. 16 - Prob. 16.1APECh. 16 - Prob. 16.1BPECh. 16 - Adjustments to net incomeindirect method Ripley...Ch. 16 - Prob. 16.2BPECh. 16 - Changes in current operating assets and...Ch. 16 - Changes in current operating assets and...Ch. 16 - Prob. 16.4APECh. 16 - Prob. 16.4BPECh. 16 - Land transactions on the statement of cash flows...Ch. 16 - Land transactions on the statement of cash flows...Ch. 16 - Prob. 16.6APECh. 16 - Prob. 16.6BPECh. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Prob. 16.8APECh. 16 - Prob. 16.8BPECh. 16 - Prob. 16.1EXCh. 16 - Effect of transactions on cash flows State the...Ch. 16 - Classifying cash flows Identify the type of cash...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Prob. 16.6EXCh. 16 - Prob. 16.7EXCh. 16 - Determining cash payments to stockholders The...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Prob. 16.10EXCh. 16 - Reporting land transactions on statement of cash...Ch. 16 - Prob. 16.12EXCh. 16 - Reporting land acquisition for cash and mortgage...Ch. 16 - Reporting issuance and retirement of longterm debt...Ch. 16 - Prob. 16.15EXCh. 16 - Prob. 16.16EXCh. 16 - Prob. 16.17EXCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.19EXCh. 16 - Prob. 16.20EXCh. 16 - Determining selected amounts for cash flows from...Ch. 16 - Prob. 16.22EXCh. 16 - Cash flows from operating activitiesdirect method....Ch. 16 - Prob. 16.24EXCh. 16 - Free cash flow The financial statement for Nike,...Ch. 16 - Free cash flow Lovato Motors Inc. has cash flows...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.2APRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.4APRCh. 16 - Prob. 16.5APRCh. 16 - Prob. 16.1BPRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsdirect method The...Ch. 16 - Statement of cash flowsdirect method applied to PR...Ch. 16 - Ethics in Action Lucas Hunter, president of...Ch. 16 - Prob. 16.3CPCh. 16 - Using the statement of cash flows You are...Ch. 16 - Dillip Lachgar is the president and majority...
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