...* Question 1 0 out of 10 points | | | Below is an excerpt from the cash flow statement of a firm for fiscal year 2003: Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of software Tax benefits of employee stock plans Special charges (Gains)/losses on investments Change in operating assets and liabilities: Receivables Inventories Pension assets Other assets Accounts payable Pension liabilities Other liabilities Net cash provided by operating activities Cash flows from investing activities: Payments for plant and other property Proceeds from disposition of plant and other property Investment in software Purchases of marketable securities and other investments Proceeds from disposition of marketable securities and other investments Net cash used in investing activities | Fiscal Year Ended December 31, 2003 $1,500 250 400 450 200 20 600 250 (475) 70 (50) 85 __200 _3,500 (2,000) 800 (500) (1,500) 1,200 _____ (2,000) __ | Additional information: Cash interest receipts Cash interest payments From the equity statement:Shareholders’ equity December 31, 2002 Shareholders’ equity December 31, 2003 Net payout to shareholders The firm’s tax rate is 35%. | 110 (200) 5,500 4,760 2,500 | What is the net interest payments after taxes?Answer | | | | | Selected Answer: | 4. 200 | | | | | * Question 2 0 out of 10 points | | | Selected...
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...Quiz: Solid Footing Chapter 9 Pg 1 Name: ______________________________ ← Print your name above. ← Print your name on the Multiple Choice Answer Form For each of the questions below – circle the best answer to the question – then place your answer on the Multiple Choice Answer Form. Only the answer on the Multiple Choice Answer Form will be counted for grading purposes. Use the information given in the chart on Page 2 to answer questions 1 to 5 1. Look at the “before” and “after” words for Account Category: Property, Plant, & Equipment, and select the correct statement below: A. All of the “before” and “after” words are correct. B. All of the “before” and “after” words are incorrect. C. Some of the “before” and “after” words are correct and some of the “before” and “after” words are incorrect. 2. Look at the “before” and “after” words for Account Category: Prepaid Assets, and select the correct statement below: A. All of the “before” and “after” words are correct. B. All of the “before” and “after” words are incorrect. C. Some of the “before” and “after” words are correct and some of the “before” and “after” words are incorrect. 3. Look at the “before” and “after” words for Account Category: Accrued Liabilities, and select the correct statement below: A. All of the “before” and “after” words are correct. B. All of the “before” and “after” words are incorrect. ...
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...L 11 ESSAY ACC 230 - Cash Flow Methods By definition, the statement of cash flows is, “a financial statement that shows the sources and all of the uses of cash for an accounting period.” (Kemp & Waybright, 2013; 2010, p. 586) The statement of cash flows is also called the cash flow statement. Cash is the most important life line of a business. Without cash, the business cannot successfully maintain stability. Furthermore, without knowing where the cash is coming from, and going to, investors are more likely to not be attracted to the business. Businesses are much like people, in the sense that they are constantly worried about cash flow. They need a statement to explain to them where the cash is going, where it is coming from, and where they started to where they have come in the period. This is the statement of cash flows. The statement of cash flows categorizes the uses and sources of cash into three categories, operating activities, financing activities, and investing activities. The first category is operating activities. Operating activities are a part of the uses of cash, as well as, the sources of cash in a business. Uses of cash for a business are obviously how the business uses the cash, or in more basic terms how it spends its money (cash out). The sources of cash are respectively, the places the business gets its money (cash in). Operating cash flows, using the indirect method, includes net income, depreciation, depletion, and amortization expenses, gains and...
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...SL NO. | JOURNAL TRANSITIONS | AMOUNT | | | | 1 | BUSINESS STARTED WITH CASH BY VENKAT | 3000000 | 2 | DEPOSITED IN BANK | 1000000 | 3 | FURNITURE PURCHASED | 300000 | 4 | ADVANCE FOR FURNITURE | 100000 | 5 | PAID RENT FOR BUILDING | 350000 | 6 | RAW MATERIAL PURCHASED | 250000 | 7 | MACHINERY | 50000 | 8 | STATIONARY PURCHASED | 5000 | 9 | SALARIES PAID | 20000 | 10 | GOODS VEHICLE PURCHASED | 300000 | 11 | ADAVANCE FOR GOODS FROM KRISHNA | 200000 | 12 | TELEPHONE CHARGES | 2000 | 13 | ELECTRICITY BILL | 500000 | 14 | OUTSTANDING ELECTRICITY BILL | 150000 | 15 | COMPUTERS PURCHASED | 50000 | 16 | ELECTRICITY CHARGES | 1000 | 17 | ADVERTISEMENT CHARGES | 10000 | 18 | INSURANCE PAID | 5000 | 19 | MACHINERY PURCHASED | 100000 | 20 | OUTSTANDING ADVERTISING EXPENSES | 3000 | 21 | COMPUTERS PURCHASED | 20000 | 22 | GENERAL EXPENSIVES | 5000 | 23 | LICENSES AND TAXEX EXPENSES | 2500 | 24 | RAW MATERIAL PURCHASED | 200000 | 25 | GOODS SOLD | 100000 | 26 | MOTOR BIKE PURCHASES | 70000 | 27 | GOODS SOLD | 250000 | 28 | MONEY DRAWN FROM BANK | 200000 | 29 | OIL CHARGES | 10000 | 30 | COMMISSION | 2000000 | 31 | GENERAL EXPENSES | 1000 | 32 | ADVANCE FOR FURNITURE | 25000 | 33 | OUTSTANDING RENT | 5000 | 34 | BIKE MAINTAINENCE | 1000 | 35 | TRANSPORTATION CHARGES | 10000 | 36 | GOODS SOLD TO PREM | 100000 | 37 | MONEY DRAWN FROM BANK | 100000 | 38 | OUTSTANDING MAINTAINANCE EXPENSES | 2000 | 39 | FOOD EXPENSES...
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...managers or other information user, focus on the cash flow and the creating cash capacity of enterprise. The statement of cash flow has become one of the main financial statements of every enterprise. Because the statement of cash flow demonstrates the ability of creating net cash flow of enterprises and reveals the liquidity of enterprise’s asset more clearly, helping the users provide object evaluation of overall financial situation. However, a series of simple initial data which statement of cash flow offered still not helpful for decision directly. Therefore, according to the analysis of cash flow statement, which can understand the company’s money flows in, flow out and balance situation, realize the main methods of cash flow out and where enterprises cash flows in. The cash flow statement is intended to provide information on a firm's liquidity or solvency, in order to provide a clear understanding of a company's financial resources at special period. Through the problems found out from financial aspect, promotes the manager understand the operating situation more sufficiently, thus offer the abundant, effective basis for its science decision. TThe cash flow statement has three sections:Operating, Investing and Finance. The cash flow statement was originally known as the flow funds statement or statement of changes in financial position. Operating Activities The operating activities are related to the incoming and outgoing cash that coming from the enterprise’s day-to-day...
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...Season 3 | Assets | | | | | | | | | | Cash | 214.6 | | 367 | | 514.6 | | | Inventories | 1.71 | | 1.14 | | 3.2 | | | Equipment | 5.75 | | 5.75 | | 5.75 | | | Total Assests | 222.06 | | 373.89 | | 523.55 | | | | | | | | | Liabilities | | | | | | | | | Accounts Payable | 32.25 | | 34 | | 40.5 | | | Total Liabilities | 32.25 | | 34 | | 40.5 | | | | | | | | | Equity | | | | | | | | | | Owner Capital | 40 | | 40 | | 40 | | | Retain Earnings | 145.31 | | 295.39 | | 296.6 | | | Total Equity | 185.31 | | 335.39 | | 336.6 | | | | | | | | | | | Total Equity and | | | | | | | | Liabilities | 222.06 | | 373.89 | | 523.55 | | | | | | | | | | | | | | | | | Accounting Income Statement | | | | | | | | Revenue | 214.6 | | 224.4 | | 222.1 | | | Expenses | 69.29 | | 74.32 | | 71.3 | | | Earnings | 145.31 | | 150.08 | | 150.8 | | | | | | | | | | | | | | | | | | | | | | | | | Financial Statement | | | | | | | | ROE | | 78.40% | | 44.70% | | 44.80% | | ROA | | 65.40% | | 40.10% | | 28.80% | | Profit Margin | 67.70% | | 66.90% | | 67.90% | | | | | | | | | | Inventory Turnover | 40.5 | | 65.2 | | 22.30% | | Asset Turnover | 0.96 | | 0.6 | | 0.40% | | | | | | | | | | Current Ratio | | | | | | | Cash Ratio | 6.65 | | 10.79 | | 12.71 | | | ...
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...payment methods and in particular cash usage in the 21st century. This essay discusses the downward trend of cash as a major payment structure and the increase in cashless transactions. We will refer to recent studies by the RBA and personal surveys and data collected and collated by this project team in this report and outlay our findings. Introduction As the demand for newer more convenient methods of payment systems increases, so to does the range of options that become available to consumers. In recent years the need to discover more convenient ways of paying for goods and services has increased and is driven by an ever-demanding consumer market. Our case objective was to find out how much reliance on cash as a payment method was for low value transactions, its usage as a payment system and the populations’ reliance on it. The main findings of this report as obtained from the recent survey, was to find out if cash does remain the most common payment option by consumers for low value transactions. The survey showed a very surprising trend between the younger and the older respondents spending habits and tendencies. Reserve Bank of Australia Survey 2007 and 2010. The Reserve Bank of Australia’s recent study in 2010, which was a follow on and update on their initial survey taken in 2007, took a cross section sample of the market and showed a downward slope of the reliance and usage of cash for high value transactions. It was shown that cash was used for mainly low value...
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...period in which their economic substance is realized not when they got them or paid for in cash. Revenues are realized when earned whether or not they are received in cash. Incurred expenses are matched, to related revenues. It doesn’t matter if they or not such expenses are actually paid in cash. This means that credit sales from 2010 will become part of the final accounts of 2010 even if they don’t get the cash in late February 2011. We all know that utility bills are billed a month after the service has been used. You usually pay your gas bill for November in the month of December. So what will happen is if a business has a year end of December you will most likely pay December’s bill in January. Although it is still unpaid it is a part of 2010’s statement as an accrual. This method of accounting gives a better picture of what we are earning by including both cash and non-cash items when it comes to calculating profit. When calculating profit the accrual does not only take the actual eleven months electricity bill it also includes the one month bill that hasn’t been paid, but the business has used that electricity. The bill is still a valid business expense for the year and needs to be recorded as that year’s expense as such. You will have to pay the bill sooner or later, but it is in the period which we used that electricity. This introduces us to the concept of depreciation. It is a non cash expense but it is necessary to how much we have used of our assets in order to...
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...Case - Statement of Cash Flow: Three Examples Exhibit #1 Alpha Corp: In this example we have a case in which years 89, 90 and 91 net income is less than net cash provided by operating activities. One of the major reasons for this appears to have been depreciating high cost of equipment. The depreciation is trending downward over the three-year period indicating less long-term assets are being purchased/capitalized to run operations. While depreciation does not involve cash, it does impact net income. In addition, account payables have been decreasing over the last two years and significant cash has been used in the last year to pay the liability. In 1990 there are significant costs associated with restructuring activities. There were costs in all 3 years but 1990 was almost triple that of 89 or 91. Cash flow from operations did not cover investments in depreciable equipment, capitalized software or dividends paid for all three years. The difference was trending in that operations would soon be able to cover these accounts. Dividends paid out decreases over the three-year period and were not paid in 91. Investing in these types of assets decreased over the 3 years. Funds to cover these costs came from long-term debt as well as the sell of class B stock. It is important to point out that Alpha sold off more than it acquired in new depreciable assets. Alpha is also spending cash on long-term debt as a primary source of financing cash flow. It appears in the past...
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...Score: 90 out of 90 points (100%) 1. award: 10 out of 10.00 points Prepare a 2011 balance sheet for Cornell Corp. based on the following information: cash = $143,000; patents and copyrights = $630,000; accounts payable = $220,500; accounts receivable = $115,000; tangible net fixed assets = $1,660,000; inventory = $301,000; notes payable = $120,000; accumulated retained earnings = $1,246,000; long-term debt = $861,000. (Be sure to list the accounts in order of their liquidity.) CORNELL COP. Balance Sheet Assets Cash Accounts receivable Inventory Current assets Tangible net fixed assets Intangible net fixed assets Total assets Liabilities Accounts payable Notes payable Current liabilities Long-term debt Total liabilities Common stock Accumulated retained earnings Total liabilities & owners' equity $ 220,500 120,000 $ 340,500 861,000 $ 1,201,500 401,500 1,246,000 $ 2,849,000 $ 143,000 115,000 301,000 $ 559,000 1,660,000 630,000 $ 2,849,000 Worksheet Learning Objective: 02-01 The difference between accounting value (or “book” value) and market value. Prepare a 2011 balance sheet for Cornell Corp. based on the following information: cash = $143,000; patents and copyrights = $630,000; accounts payable = $220,500; accounts receivable = $115,000; tangible net fixed assets = $1,660,000; inventory = $301,000; notes payable = $120,000; accumulated retained earnings = $1,246,000; long-term debt = $861,000. (Be sure to list the accounts in order of their liquidity.) CORNELL...
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...Solution 1) Describe Linear Technologies pay-out policy. As we can see from Exhibit 1 Linear Technology has been paying dividend steadily since 1992. Thus the pay-out policy is a large part in dividends. Its first dividend is paid in 1992. The dividend policy has grown over the years. This may be so that the company projects itself as a less risky share and thus also gaining investors faith. The investors buy its shares and thus increase its demand. This helps to gives positive signals to the investors signalling that the company is stable and can generate earnings steadily. This hypothesis is gains standing from the dividend hypothesis theory. Also analysing the numbers we see that Linear started its dividends with a low payout ratio of around 14.6%. It is known from general trends that investors out faith in early dividend paying firms but punish them if the company reduces its dividend over time. The management of Linear Technologies knows this fact and have increased the dividend over the years. Linear started with a modest pay-out of $0.00625 dividends/share but then increased its dividends steadily by $0.00125 every four quarters. After 2000 it increased this by $0.01 every year. In quarter 3 of 2003 Linear Technology paid a dividend of $0.05 with a pay-out ratio of 27.6%. Even after the tech bubble burst in 2002 the firm has increased its dividend thus signalling to the investors its strength. At this point its pay-out ratio was in the range of 25% to 30%. This was...
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...of regular and irregular cash inflows and outflows for a business organisation Cash flow- Is the total amount of money being transferred into and out of a business, especially as affecting liquidity. Basically, the cash comes in from sales, loan proceeds, investments and the sale of assets and goes out to pay for operating and direct expenses, principal debt service, and the purchase of assets. A cash flow budget highlights the following figures: * Sales/revenue * Development expenses * Cost of goods * Capital requirements * Operating expenses The cash inflow of a business is simply the total money earned by that business; cash inflow can include interest or money made on investments, sales, or any other operating activity that can result in a monetary profit. Examples of a cash inflow are sales, loans dividend receive etc. The cash outflow of a business is constituted of its expenses--its bills, and other costs like purchases, bills etc.Cash inflow minus cash outflow will yield the take-home profit of a business. The different between cash inflow and cash out flow is a cash inflow means that cash is going into the company for example receipt of a bank loan, investments and shareholder investments, interest on savings. A cash outflow mean the cash is going out of the company business such as purchase of goods, wages, rent and daily operation expenses, stock, income tax and other forms of tax, divided payments etc Cash inflow also help the business...
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...The Role of Cash in a Business Crucial Lesson Taught to People in Taking First Aid Always check first if a victim is breathing, and if not, deal with that first. Statement of Cash Flow There have been instances where people have tended to bleeding wounds, only to find that the victim died from, say, a blocked air passage. Many things are essential to life, but in the short term, nothing is more important than breathing, in that an absence creates the most immediate life threatening "crisis". Cash as Breath of a Business Anyone running a business should think of cash as breath. Cash, in a broad sense, means a positive bank account or the access to a credit line. Another way of thinking: "If I write a check, will the bank cash it"? The Role of Cash in a Business The Role of Cash in a Business Cash as Breath of a Business (Cont’d) Cash as Breath of a Business (Cont’d) When a business loses access to funds, suppliers stop shipping and workers stop showing up at work. Inevitably a creditor will take steps to put the firm in receivership, at which point the owners have legally lost the ability to operate the business. A company going into receivership is normally broken up: assets are sold, often at a steep discount, to recover funds to payoff creditors. The management of a business sometimes may be so focused on longerterm issues: (1) bringing a new product to market (2) working with an existing customer (3) attracting new investors They might...
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...Background Ford Motor Company was founded by Henry Ford and 11 investors in 1903. The company is based out of Dearborn, Michigan. Ford Motors is a worldwide company, with 335,000 employees, operating in 25 countries and on six continents. Ford changed the way cars were made with their innovative assembly production methods. Having gone public in 1956, the company grew to become the world’s largest truck manufacturer and the second largest total automotive manufacturer. In addition to manufacturing cars and trucks, they are involved in producing components/systems and are engaged in financing and rentals. Ford experienced significant growth derived from company acquisitions. The acquisitions leading up to 2000 consisted of Hertz Co., Jaguar, Volvo, and Land Rover. Auto industry sales are sensitive to the economic cycle. Echoing this notion, Ford’s sales tend to experience volatility during times of economic recessions and booms. In these turbulent times, the company has a high variability of cash on hand and equity market value. In 1999, Ford had a net income of $7.2 billion (approximate 4.5% profit margin), and revenues of $162.6 billion. Ford’s automotive segment accounts for 85% of total revenue. Their US car and truck sales are responsible for 24.1% of the total market share. As of 2000, Ford had 1.15 billion common shares of stock and 70.9 million shares of Class B stock. Among these two shares, the Ford family held all Class B shares, which gave them special voting...
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...DEPOSITS A deposit account is a savings account, current account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represents the amount owed by the bank to the customer. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited. Individuals and corporations need money to pursue their daily business. They place the money on deposit to earn interest, using the money market. Types of deposits are: * Call deposits, the depositor has the right to use the money at any time, sometimes short notice periods are agreed. As the depositor can show up any time to request the deposit back, it is also called sight deposit. * Fixed deposits bear a fixed time and fixed interest rate, and are therefor also called term or time deposits. * Overnight lending occurs usually from noon to noon, using a special rate. to give as security or in part payment. Major Types * Checking accounts: A deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts. * Money market account: A deposit...
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