FINANCIAL ACCT.FUND.(LOOSELEAF)
FINANCIAL ACCT.FUND.(LOOSELEAF)
7th Edition
ISBN: 9781260482867
Author: Wild
Publisher: MCG
bartleby

Concept explainers

bartleby

Videos

Question
Book Icon
Chapter 6, Problem 1AA
To determine

Cash Equivalents:

Cash equivalents are part of liquid investments. It includes marketable securities, physical cash and commercial paper.

Cash Flow:

Cash flow is a statement which shows flow of cash and cash equivalents as moving inward and outward of the business in a given time. In other words, cash flow statement shows cash generated or used by a company.

Inventory:

Inventory is an asset of the company which includes three types of goods: work in progress, raw material and finished goods which are in the process of making or already ready to be sold in the market. In other words inventory is goods which are unsold and would be sold.

1.

To identify: Total amount of cash and cash equivalents and its percentage in reference of total current assets, total current liabilities, total shareholder’s equity and total assets for 2015 and 2017.

Expert Solution
Check Mark

Explanation of Solution

Balance of cash and cash equivalents as on September26, 2014and 2015 are as follows:

    ParticularsBalance as on September26, 2015($)% of cash and cash equivalents(%)Balance as on September27, 2014($)% of cash and cash equivalents(%)
    Cash and its equivalents21,12013,844
    Current Assets89,37823.668,53120.2
    Current Liabilities80,61026.263,44821.8
    Shareholder’s Equity119,35517.7111,54712.4
    Net Assets290,4797.3231,8396.0

Table (1)

Review of trend:

From above data, it is observed that cash and cash equivalents have increased in 2017 as compared to 2016.

Hence, it is ascertained that liquidity position of A Company has increased slightly as compared to last year .

Working notes:

Formula to calculate % of cash and cash equivalent is,

  %ofcashandcashequivalent=Respectiveyear'scashandcashequivalentsAnalyzeitemamount×100

Percent of cash and cash equivalents on September 26, 2015 proportionate to:

Calculation of current assets %,

  %ofcashandcashequivalent=$21,120$89,378×100=23.6%

Calculation of current liabilities %,

  %ofcashandcashequivalent=$21,120$80,610×100=26.2%

Calculation of shareholder’s equity %,

  %ofcashandcashequivalent=$21,120$119,355×100=17.7%

Calculation of net assets %,

  %ofcashandcashequivalent=$21,120$290,479×100=7.3%

Percent of cash and cash equivalents on September 27, 2014 proportionate to:

Calculation of current assets %,

  %ofcashandcashequivalent=$13,844$68,531×100=20.2%

Calculation of current liabilities %,

  %ofcashandcashequivalent=$13,844$63,448×100=21.8%

Calculation of shareholder’s equity %,

  %ofcashandcashequivalent=$13,844$111,547×100=12.4%

Calculation of net assets %,

  %ofcashandcashequivalent=$13,844$231,839×100=6.0%

2.

To determine

Cash and cash equivalents percentage change in the beginning and ending of the year through the information contained in cash flow statement of September26, 2015 and September27, 2014.

2.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate the percentage change in cash and cash equivalents is,

  Percentagechange=(( Cash andcashequivalentsattheend Cashequivalentsinthebeginning )Cashandcashequivalentsattheend)

2015

Given,

Cash and cash equivalents in the beginning of 2015 is $13,844.

Cash and cash equivalents at the end of the year is $21,120.

Substitute $13,844 for cash and cash equivalents in the beginning of the 2015 and $21,120 at the end of the year.

  Percentagechange=( ( $21,120$13,844 ) $13,844)=52.6%

Hence, percentage change represents an increase of 52.6%.

2014

Given,

Cash and cash equivalents in the beginning of 2014 is $14,259

Cash and cash equivalents at the end of the year is $13,844.

Substitute $14,259 for cash and cash equivalents in the beginning of the 2015 and $13,844 at the end of the year.

  Percentagechange=( ( $13,844$14,259 ) $14,259)=2.9%

Hence, percentage change represents a decrease of 2.9%.

3.

To determine

Day’s sales uncollected as of September26, 2015 and September27, 2014.

3.

Expert Solution
Check Mark

Explanation of Solution

Day’s sales uncollected imply how much days a company takes to collect its accounts receivables.

Formula to calculate day’s sales uncollected is,

  Day'ssalesuncollected=(AccountsreceivableNetsales)×365

2015

Given,

Accounts receivable is $16,849.

Net sales are $233,715.

Substitute $16,849 for accounts receivable, and $233,715 for net sales.

  Day'ssalesuncollected=( $16,849 $233,715)×365=0.0720×365=26.31

2014

Given,

Accounts receivable is $17,460.

Net sales are $182,795.

Substitute $17,460 for accounts receivable, and $182,795 for net sales.

  Day'ssalesuncollected=( $17,460 $182,795)×365=0.095×365=34.86

Hence, day’s sales uncollected are accounted for 2014 is 34.86 days and for 2015 is 26.31 days.

  • Thus, it is concluded that A Company has improved slightly in order to collect its receivable as now it would take 8.55 less days to collect receivables.
  • Accounts receivables are important part of the company as it indicates about the turnover. So, company should take steps for its improvements.

4.

To determine

Day’s sales uncollected as of September26, 2015.

4.

Expert Solution
Check Mark

Explanation of Solution

Day’s sales uncollected imply how much days a company takes to collect its accounts receivables.

Given info,

Accounts receivable is $16,849

Net sales are $233,715.

Formula to calculate day’s sales uncollected is,

  Day'ssalesuncollected=(AccountsreceivableNetsales)×365

Substitute $16,849 for accounts receivable and $233,715 for net sales.

  Day'ssalesuncollected=( $16,849 $233,715)×365=0.072×365=26.31

Hence, day’s sales uncollected are accounted for 26.31 days .

Thus, company would take 8.55 more days to collect its receivables in the year 2015 as compared to 2014.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Country Selection for your Portfolio Project First, review the Portfolio Project description and the grading rubric in the Module 7 folder. Then, choose a country you will study and become an expert in as you prepare for the final project. Once you have selected a country, select a product that is currently not available there. This country-product combination will be the focus of your Portfolio Project. There can be only one person per country. So post early to ensure you get your country choice. It is best if we have representation from different regions of the world (e.g., Africa, Asia-Pacific, Europe, Latin/Caribbean, the Middle East/North Africa, and Canada), so be aware of countries that have already been selected. Helpful Hint: The World FactbookLinks to an external site. is an excellent resource to use when deciding which country you want to study.  You should respond to the product or service choice selection posted commenting on initial thoughts about appropriateness to the…
For this discussion, address the questions below: Choose a global company that you feel does an excellent job of marketing its products and services. Discuss your perception of how the company avoids self-reference criterion to market effectively to different regions. You can structure your answer in the following manner: start your post with a well-developed paragraph to explain why you selected this company for this assignment. In the next paragraph, describe what you think drives this company's marketing strategy success. The third paragraph should discuss your perception of how the company avoids self-reference criterion to market effectively to different regions. Your fourth paragraph should focus on how you think the company avoids ethnocentric behavior in international markets where they are present.
We are all strategists. That is, we set goals, navigate threats, and tap opportunities. We leverage our resources and implement decisions and actions to reach our goals. Sometimes we succeed and sometimes we fail.   (Adapted from Figure 1.1, Grant, 2022, p. 7) Please share an experience in which you played the strategist. What was your goal? Did the goal fit (or not fit) with the realities of the external environment and your resources? What implementation decisions and efforts did you make? Was your strategy successful or not? Why? Did strategy execution (i.e., implementation, monitoring, and control) play a key role in your strategy’s success or failure?
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Text book image
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Text book image
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License