...Cash Flow Cash flow is a necessary statement of any organization. It provides an idea of how an organization knows if they have enough money to pay the necessary fees and pay the bills. The cash flow statement will help to make it clear that NXTech has enough funds to keep the company running at a high level. The final cash flow for the fourth year is $175,505, which is reasonable for companies of this size. The current status of cash flow shows that the company is financially stable, but it is unable to hire more employees. The more revenue a company generates, the company can establish the more on cash flow and eventually hire more employees. In Table 14 below, you will see a summary of annual income and expenses. Below on table 14 you will...
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...1. Analysis of the statement of cash flows suggests that this strategy was implemented during year 8. Specifically, during that year the cash flows of Land’s End to build up its inventory to implement its new policy are very high---$104.545 million cash outflow to acquire additional inventory. 2. Depreciation expense represents the allocation of the cost of fixed assets over the useful life of the asset. Amortization expense represents the allocation of the cost of intangible assets over the useful life of the asset. In each of these cases, the investing cash outflow occurs when the asset is acquired and not when its cost is subsequently allocated to expense. a. Increases in receivables cause operation cash flows to be less than net income because revenues (reflecting receivables) are included in the net income, but the related cash may not yet be received. On the other hand, decreases in receivables cause operating cash flows to be greater than net income because cash is received for revenues recognized in prior periods. b. Decreases in inventory causes net income to be higher than operating cash flows because sales revenue is recognized when earned but the inventory sold can be paid for in earlier periods. Increases in inventory cause operating cash flows to be less than net income because cash was used to increase inventory levels. When these inventories are subsequently sold revenues will be earned and net income will be increased. However, this inventory...
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...Cash Flow Analysis Instructions: Analyze the case study, "Frank Smith Plumbing." Analyze the "Frank Smith Plumbing's Financial Statement" spreadsheet. Compare the cost of the truck to the cash flow records Compile your calculations in a Microsoft® Excel® document Develop a 1,050-word analysis and include the following: • Explain why limited leverage is good for business. Show the profitability of the project so that Stephanie can convince her father to purchase the truck by borrowing money. • Explain how Stephanie should convince her mother that it is inappropriate to call the bank manager and his wife for assistance in getting the loan approval? • Analyze whether the investment in the truck is profitable. • Explain whether it is more beneficial for Frank to close his business. • Explain what you would do in this same situation. Format your assignment consistent with APA guidelines. Click the Assignment Files tab to submit your assignments. Supporting Material: Frank Smith Plumbing Case Study Frank Smith Plumbing Case Study Excel Spreadsheet Cash Flow Analysis Grading Guide Find The Complete Answers just a click away FIN 370 Complete Answer About Author This article covers the topic for the University Of Phoenix FIN 370 Week 4 Cash Flow Analysis the author is working in the field of education from last 5 years. This article covers the basic of FIN 370 Complete Answer from UOP. Other topics in the class are as follows: FIN 370 WEEK 4 CASH FLOW ANALYSIS ...
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...Pro forma analysis cash flow forecasting Apartment Investment Case Study Scenario An investor is considering buying an apartment building with 140 units offered for sale at $16,500,000. The subject apartment building has the following unit mix: Additionally, the following assumptions are also being made by the investor in order to construct a 5-year cash flow pro forma: Vacancy and Credit Loss In the current market, vacancy and credit losses are running at 9%. Due to the improving market conditions as well as the investor’s prior experience leasing and operating multifamily buildings, it’s expected that vacancy will steadily decline over the next 5 years to 5%. Potential Rental Income Potential rental income is based on the above unit mix. The 1-bedroom and studio rental rates are expected to increase at 1% annually. The 2-bedroom units are expected to increase at 2% annually. Financing After a preliminary discussion with a relationship manager at a local bank it’s determined that a loan can be extended based on the lesser of a 1.25x debt service coverage ratio or 80% loan to value. Additionally, assuming the underwriting process doesn’t reveal any red flags, it’s expected that the loan will be based on a 20 year amortization and a 6% interest rate. Operating Expenses The following table breaks out historical operating expenses for the property as well as projected increases over the holding period. Reserves for Replacement In addition to the above operating expenses...
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...Solution to Polaroid Cash Flow Statement Analysis: |Observations | |Cash from operations is positive in 98 and 99 and becomes Negative in ’00 – a clear sign of weakness for a mature | |business – not unusual for a young startup. | |Loss in 98 to a small profit and a larger profit in 00. | |Inventory increased in 00 using up operating cash and this may be a sign of weak sales resulting in unintentional | |building of inventory. | |Receivables decline which provides cash but may also be a sign of sales weakness or more aggressive collections to | |compensate for weak cash position. | |Investing activities are using cash. | |Asset replacement exceeds depreciation suggesting that they are replenishing fixed assets. | |Cash from operations is not sufficient to cover fixed asset purchases so they are being funded from other sources. | |Sale of other assets is providing funds to pay for some of the fixed asset replacement...
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...CASE 3-1 Cash Flow Analysis – Orthodontic Centers of America 1. Actual cash collection for year 1998 to 2000: | 2000 | 1999 | 1998 | Total Receivables | 3.535.000 | 87.563.000 | 66.477.000 | net change | (84.028.000) | 21.086.000 | 66.477.000 | | | | | Patient prepayments | - | - | 4.326.000 | net change | - | (4.326.000) | 4.326.000 | | | | | Net Revenue | 268.836.000 | 226.290.000 | 171.298.000 | Less: change in account receivable | 84.028.000 | (21.086.000) | (66.477.000) | Plus: change in advances | - | (4.326.000) | 4.326.000 | Actual Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 | 2. (i) Comparison of cash collection with revenue reported for each year: | 2000 | 1999 | 1998 | Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 | Reported Revenue | 268.836.000 | 226.290.000 | 171.298.000 | % Change | 31,26% | -11,23% | -36,28% | Difference | 84.028.000 | (25.412.000) | (62.151.000) | (ii) Comparison of cash collection with revenue using pre-Januay 1, 2000 recognition method: | 2000 | 1999 | 1998 | Cash Collections...
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...Chapter 2 Mini Case: “Financial Statement and Cash Flow Analysis” Jennifer L. Hatch Professor Edward Strafaci Advanced Financial Management January 28, 2015 Chapter 2 Mini Case: “Financial Statement and Cash Flow Analysis” Introduction According to the mini case, Jaeden Industries has provided their account balances as of December 31, 2010. In order to determine the company’s free cash flow, liquidity, debt and profitability ratios, and market ratios, the following are required: dividend payout ratio of 25%, tax rate of 34%, stock price on December 31, 2009 was $42.39 and the stock price on December 31, 2010 was $56.82. Below are the calculations required in order to obtain a cash flow analysis on Jaeden Industries. Jaeden’s Free Cash Flow Free cash flow involves the following acronyms that are to be applied to the first party of the formula: net operating profits after taxes (NOPAT), earning before interest and taxes (EBIT), T = corporate tax rate, and operating cash flow (OCF). In order to calculate the free cash flow (FCF), two steps are required. The first step is to calculate the OCF, and then the free cash flow can be determined. Operating Cash Flow OCF = [EBIT x (1 – T)] + Depreciation OCF = [$13,119,000 x (1 - .34) + $700,000 OCF = [$13,119,000 x .66] + $700,000 OCF = $8,658,540 + $700,000 OCF = $9,358,540 Free Cash Flow In order to determine the second part of the calculation, the following information is required: change in gross fixed...
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...TOPIC : CASH FLOW ANALYSIS – SIGNAL CABLE COMPANY Introduction The Signal Cable Company is a cable manufacturer for analog and digital interconnects, speaker, video and home theater cables. It is located in Tarrytown, New York. The company is well known for “highest standard in quality and customer service” and their “superior design” and “No-Hype approach resulted in one of the best price/performance ratio in the industry”. After Signal Cable had enjoyed quite a run up in profits over the past few years, the management decided to enter in the fiber optic communications business. The market was growing, the demand increased and the competition was not too severe. Eventually, the company established two additional manufacturing facilities and increased its inventory to meet the needs. Current Situation Despite Signal Cable had enjoyed profits in past few years, the accounting statements showed a lower net profit margin. Furthermore, the cash balance and the stock price had fallen recently. Jay Smith, Assistant to the President, has now the challenge to prepare some feasible answers and suggestions for his boss, Joe Mathis, who has to inform the shareholders about the current situation. Questions of the Case Study 1. Why has the stock price fallen despite the fact that the net income has increased? A company’s stock price is depend on its demand and supply in the stock market. There are many factors to influence an investor’s decision of buying or selling the company’s...
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...Chapter 13 ------------------------------------------------- Capital Budgeting: Estimating Cash Flow ------------------------------------------------- and Analyzing Risk ANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS 13-1 The firm’s FCFs reflect both its past and current investments. Past investments produce current FCFs, but current investments are expected to add to FCF at some future point. Conceptually, a project’s projected cash flows and are expected to contribute that same amount to the firm’s future free cash flows. In practice, project cash flows are analyzed to determine what projects the firm will invest in, and then the sum of those investments, and the cash flows they produce, will in the future be reflected in the firm’s FCFs. If a firm identifies and then invests in positive NPV projects, this will increase the value of its operations as determined by the FCF model. The central issue is analyzing individual projects, and here the key factor is assessing the cash flows. See the BOC spreadsheet model. We go through the model to show how capital budgeting projects are analyzed. In this case, the initial NPV, IRR, and MIRR, all evaluated at the 12% average cost of capital and using the expected input values, indicate that the firm should accept the project. However, the risk analysis as done in the scenario analysis indicates that the project is riskier than average, hence the evaluation should be done with a somewhat higher WACC...
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...feel comfortable with most of the material learned. Like preparing a statement of cash flows and analysis of company’s financial statements. I do feel somewhat comfortable with understanding the difference of common and preferred stock, but not entries. I do not feel comfortable with most of the material learned. Like preparing a statement of cash flows and analysis of company’s financial statements. I do feel somewhat comfortable with understanding the difference of common and preferred stock, but not entries. I do not feel comfortable with most of the material learned. Like preparing a statement of cash flows and analysis of company’s financial statements. I do feel somewhat I do not feel comfortable with most of the material learned. Like preparing a statement of cash flows and analysis of company’s financial statements. I do feel somewhat comfortable with understanding the difference of common and preferred stock, but not entries. comfortable with understanding the difference of comm I do not feel comfortable with most of the material learned. Like preparing a statement of cash flows and analysis of company’s financial statements. I do feel somewhat comfortable with understanding the difference of common and preferred stock, but not entries. on and preferred stock, but not entries. I do not feel comfortable with most of the material learned. Like preparing a statement of cash flows and analysis of company’s financial statements. I do feel somewhat comfortable with understanding...
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...Running head: Financial Analysis Financial Analysis of eBay Barteet, Jodi Table of Contents Progress in the Last Year 3 Balance Sheet Horizontal Analysis 5 Balance Sheet Vertical Analysis 5 Earnings Horizontal Analysis 7 Liquidity Ratio Analysis 8 Profitability Ratio Analysis 9 Long-Term Solvency Analysis 10 Cash Flow Adequacy Analysis 10 Market Strength Analysis 11 Evaluation 12 References 13 Progress in the Last Year eBay Inc. remains one of the few dot-com success stories long after many of its peers were forced into bankruptcy. eBay has been able to make their name synonymous with internet-based auctions; much like Xerox with copiers and Kleenex with facial tissue, eBay is the undisputed market leader in the world of online auctions. Unlike Xerox and Kleenex, however, eBay has been able to branch out from their initial success into multiple lines of business that are proving to be just as lucrative and allow eBay to continue to expand. As their Annual Report states eBay is now “organized into three businesses: Marketplaces, Payments and Communications. Each is a thriving and successful business in its own right.”(eBay Annual Report 2005, introduction). eBay’s core business remains the online-auction marketplace where $44.3 billion in gross merchandise volume was traded in 2005 (eBay Annual Report 2005, Introduction). eBay’s payment service, PayPal, makes transferring money and accepting payments, both critical to its online auction business...
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...Super Project Case • What are the relevant cash flows that General Foods should use in evaluating the Super Project? In particular, how should management deal with such issues as o Test-market expenses? o Overhead Expenses? o Erosion of Jell-O contribution margin? o Allocation of charges for the use of the excess agglomerator? The relevant cash flows that General Foods should use in evaluating the Super Project are considered Incremental cash flows and are “the changes in the firm’s cash flows that occur as a direct consequence of accepting the project”. Incremental cash flows include changes in working capital; cost of project, overhead expenses, erosion of Jell-o margin, opportunity cost (allocation of charges for the use of the excess agglometor), net proceeds and tax savings from the sale of old assets. General Foods Accounting and Financial Manual specified that capital project request be prepared on an incremental basis. Although Super Project incurred an expense of testing the market, this expense must not be included in the cash flow analysis because it can be considered a sunk cost. General Foods expected Super to capture a 10% share of the total desert market. This expense is required for conducting market research and will not be recovered. Sources of cash flow include, Overhead expenses, which must be included in the cash flow analysis. The estimated expansion of the Super Project to capture 80% of the market will require extra capital and...
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...The most common evaluation techniques include 1. Present worth analysis, 2. Annual (periodic) worth analysis, 3. Future worth analysis, 4. Internal rate-of-return, 5. Benefit-cost ratio, and 6. Payback period method. Below is a discussion of each of these techniques. Present Worth (PW) Analysis Objective: To evaluate and compare mutually exclusive alternatives based on the equivalent netpresent worth of the lifecycle cash flows for each alternative at a given minimum attractive rate of return (MARR). • The net present worth is computed as Net PW = PW(Revenues) – PW(Costs) • The cash flows include all life-cycle revenues and costs, i.e., all revenues and costs over the service life of the project or investment. • A zero or positive “Net PW” indicates a “profitable” or “economical” project or investment. • A positive “Net PW” indicates that the investment or project has an annual rate of return greater than the MARR. • A zero “Net PW” indicates that the investment or project has an annual rate of return exactly equal to MARR. • Similarly, a negative “Net PW” indicates that the investment/project has an annual rate of return less than MARR, hence, not preferable. • When comparing alternatives, the alternative with a higher “Net PW” is preferred over one with a lower “Net PW”. • Comparing alternatives using the “Net PW” criteria has to be done based on the same analysis period or lifetime for the alternatives....
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...Procedure Cash Management Cash Management 1. DEFINITIONS............................................................................................................. 3 1.1. Cash Management ............................................................................................................................... 3 1.2. Cash Flow Analysis ............................................................................................................................. 3 2. SCOPE ....................................................................................................................... 3 3. TARGET/PURPOSE .................................................................................................. 3 3.1. Cash Management on plant/location level ........................................................................................3 3.2. Cash Management on group level ..................................................................................................... 3 4. CASH MANAGEMENT PROCESS ............................................................................ 4 4.1. Golden rule for cash and finance management at CO. ................................................................... 4 4.2. Cash Management Instruments ......................................................................................................... 4 4.3. Payment terms .............................................
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...total amount of funds that can be used is $250,000, which either Corporation A or Corporation B can be purchased but not both. Before acquiring another group to implement with the exist organization, a detailed analysis of data is to be done. An example of this is when ServiceMaster acquired Certified Systems Inc. or CSI, which was America’s ninth largest professional employer organization or PEO (Buchan, 1997). According to the article ServiceMaster acquires Professional Employer Organization, acquiring a company “is consistent with our plan to enter new markets with high growth potential, low capital requirements, recurring revenue streams, and a strong emphasis on people." That article also shows that about 1,000 of the professional employer organizations in that business industry provides not even five percent of the possible $1 trillion PEO needs to service the needs of the industry and the community. So such analyses could interpret the benefits to the 6.5 million ServiceMaster consumers with such an acquisition (Buchan, 1997). Define, Analyze, Interpret Answers With the ServiceMaster as an example acquiring another organization, the team will analyze the acquisition of either Corporation A or Corporation B. The team conducted an analysis of income, cash flow, net present value and internal rate of return. The first step to analyze the effectiveness of both corporations is to compare the current status of each organization’s net income. The net income for Corporation...
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