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Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Question
Chapter 3, Problem 24PC
To determine
Match the companies with the clues given in the common-size statement of cash flows.
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Students have asked these similar questions
True or False.
15. Balances of nominal accounts are transferred to the Capital account in the SFP. *
34. Statement of Cash Flows explains the observed difference in the cash balance from the beginning to the end of the period. *
35. The bottom line of the Statement of Cash Flows is equivalent to the cash balance presented on the Statement of Financial Position. *
44. The common-size Statement of Comprehensive Income of Company A and Company B shows net income of 10% and 8%, respectively. Company A is more profitable than Company B. *
28. The capital stock account reports the proceeds from the issuance of the stocks. *
39. Vertical analysis compares the balances of one account over different periods.
If a organization's accounts payable balance decreases during the period, when the indirect method is used:
Multiple Choice
The amount of the decrease is added within the operating activities section of the statement of cash flows.
The amount of the decrease is subtracted within the operating activities section of the statement of cash flows.
The amount of the decrease is added within the investing activities section of the statement of cash flows.
The amount of the decrease is subtracted within the investing activities section of the statement of cash flows.
An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? C . Th is ratio is an operating profi tability ratio, measuring the operating cash fl ow generated accounting for taxes and interest and indicating a company’s liquidity.
Chapter 3 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 3 - Need for a Statement of Cash Flows. The accrual...Ch. 3 - Articulation of the Statement of Cash Flows with...Ch. 3 - Classification of Interest Expense. Under U.S....Ch. 3 - Prob. 4QECh. 3 - Classification of Changes in Short-Term Financing....Ch. 3 - Classification of Cash Flows Related to...Ch. 3 - Treatment of Non-Cash Exchanges. The acquisition...Ch. 3 - Computing Cash Collections from Customers....Ch. 3 - Computing Cash Payments to Suppliers. Lowes...Ch. 3 - Computing Cash Payments for Income Taxes. Visa...
Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting the Statement of Cash Flows. The...Ch. 3 - Interpreting the Statement of Cash Flows. Texas...Ch. 3 - Interpreting the Statement of Cash Flows. Tesla...Ch. 3 - Interpreting the Statement of Cash Flows. Gap Inc....Ch. 3 - Prob. 19PCCh. 3 - Prob. 20PCCh. 3 - Interpreting the Statement of Cash Flows....Ch. 3 - Extracting Performance Trends from the Statement...Ch. 3 - Interpreting a Direct Method Statement of Cash...Ch. 3 - Prob. 24PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 26PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 1AICCh. 3 - Prob. 1BICCh. 3 - Prob. 1CICCh. 3 - Prob. 1DICCh. 3 - Prob. 1EICCh. 3 - Prob. 1FICCh. 3 - Prob. 1GICCh. 3 - Prob. 1HICCh. 3 - Prob. 2AICCh. 3 - Prob. 2BICCh. 3 - Prob. 2CICCh. 3 - Prob. 2DICCh. 3 - Prob. 2EICCh. 3 - Prob. 2FICCh. 3 - Prob. 3IC
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- During the year, Hepworth Company earned a net income of 61,725. Beginning and ending balances for the year for selected accounts are as follows: There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows. Required: 1. Prepare a schedule of operating cash flows using the indirect method. 2. Suppose that all the data are used in Requirement 1 except that the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was 20,475. What is the ending balance of accounts payable? 3. CONCEPTUAL CONNECTION Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs 25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? If not, what would you suggest be done?arrow_forwardFor the past two years, Monroe Corporation’s statement of cash flows has shown net cash provided by financing activities. Which of the following choices could explain this result? a. Collection of accounts receivable balances. b. Sales of factory equipment. c. Issuance of long-term debt. d. Receipt of cash dividends from investments in other company’s stock.arrow_forwardThe cash flows from (used for) operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $558,800 and accounts receivable decreased by $39,700 during the year, what was the amount of cash received from customers?$fill in the blank 1 b. If income tax expense for the current year was $38,900 and income tax payable decreased by $4,500 during the year, what was the amount of cash paid for income taxes?$fill in the blank 2 c. Briefly explain why the cash received from customers in part (a) is different from sales.Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $39,700 during the current year.arrow_forward
- Some transactions that don’t increase or decrease cash must be reported inconjunction with a statement of cash flows. What activity of this type did Targetreport during each of the three years presented? What are two other such activitiesthat some companies might report?arrow_forwardPrepare the statement of cash flows in good form usingINDIRECT METHOD. Be sure to provide a proper heading for thestatement. Thank you.arrow_forwardCash flow statement complements the income statement and the balance sheet summarizing all cash inflows and outflow transactions in the company within the given financial year. However, there are two different methods of preparing the cash flow statement – direct and indirect. Enlist the differences between Direct and Indirect method of cash flow statementarrow_forward
- Complete each of the columns on the table below, indicating in which section each item would be reported on the statement of cash flows (operating, investing, or financing), the amount that would be reported, and whether the item would create an increase or decrease in cash. For item that affect more than one section of the statement, indicate all affected. Assume the indirect method of reporting cash flows from operating activities. Enter all amounts as positive numbers. The first item has been completed as an example. Item Statement Section (operating, financing, investing) Amount to Report +/- Effect on Cash Depreciation of $15,000 for the period Operating $15,000 Increase Issuance of common stock for $35,000 $ Increase in accounts payable of $7,000 $ Retirement of bonds at face value of $100,000 $ Purchase of long-term investments for $94,500 $ Dividends declared and paid of $8,300 $ Increase in Prepaid Rent of $4,500 $ Decrease in…arrow_forwardThe total change in cash as shown near the bottom of thestatement of cash flows for the year should agree withwhich of the following?a. The difference in Retained Earnings when reviewingthe comparative balance sheet.b. Net income or net loss as found on the income statement.c. The difference in cash when reviewing the comparativebalance sheet.d. None of the above.arrow_forward1. Prepare the statement of cash flows using the indirect method for the year ended December 31, current year. (List cash outflows as negative amounts.) This will include operating, investing, and financing activities.arrow_forward
- 1. What are the major cash flow items in each area? 2. What is the trend of cash flows over the most recent two year period? 3. Does the company have a positive cash flow from operations? 4.What was the amount of cash flow generated from operations?arrow_forwardThe change in cash for the year can be calculated by comparing the balance of cash reported in this year’s and last year’s balance sheet. Why is the statement of cash flows needed?arrow_forwardThe following are excerpts from Hamburg Company’s statement of cash flows and other financial records. From Statement of Cash Flows: Cash flows from operating activities $220,309 Cash flows from investing activities -32,336 Cash flows from financing activities -23,618 From other records: Capital expenditure costs 12,310 Cash dividend payments 11,146 Sales revenue 559,818 Total assets 337,149 Compute cash flows to sales ratioarrow_forward
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