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
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Rapoport, in Wall Street Journal, March 14, 2006, p. C3. 1. Why did Blockbuster have to restate its statements of cash flows? Blockbuster was reporting the cost of the buying DVDs in the investing part of the flow. However, after talking to the SEC they decided that these costs should be placed onto the operating cash flow. This had a large negative effect on their operating cash flows during the restatement periods 2. Read SFAS #95, paragraphs 24 and 85-87, and explain how this relates to
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PURWANINGRUM 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 | -
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increased 2343.67; deferred revenue increased 897.78. The net income is decreasing while the company is purchasing more inventories, which indicates that the company might be just launched and have not started to generate profit. 2. Significant non-cash or non-operating adjustments: Company A: Impairment charges, impairment of equity investment in joint venture, other than temporary impairment of investment, amortization of marketable securities, and purchase of trading securities. Company B: Acquisition
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Sunset Medical: A Statement of Cash Flow Case Scott Wandler* College of Business Administration University of New Orleans New Orleans, LA 70148 swandler@uno.edu Kevin Watson College of Business Administration Iowa State University Ames, IA 50011 kwatson@iastate.edu *Corresponding Author Abstract Medical is based on a real situation occurring at an Orthopedic Medical practice in Colorado. While attending a trade show Dr. Jones, the managing partner at Sunset Medical, was approached
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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
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Procedure Cash Management Cash Management 1. DEFINITIONS............................................................................................................. 3 1.1. Cash Management ............................................................................................................................... 3 1.2. Cash Flow Analysis .....................................................................................................................
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financial statements along with integrated income statement, balance sheet and cash flow projections for evaluating various types of transactions such as: Sale of the Company Merger of the Company Public or Private Placement of new capital (bank loans, high yield issue, IPO or secondary equity offering, private equity or debt placement, etc.) Leveraged buyouts / Management buyouts Restructuring / Bankruptcy In these cases, the associate or analyst is expected to construct the financial model with
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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
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Case 10:Phuket Beach Hotel VALUING MUTUALLY EXCLUSIVE CAPITAL PROJECTS Case Overview Planet Karaoke Pub Project Lives Monthly rental (5% increment for 3rd and 4th year) 4 years 170, 000 (THB) 770, 000 to 1, 000, 000 (THB) 55, 000 (THB) Up front renovation cost (Depreciated over the life of project - straight line method with zero salvage value) Overhead expenses Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Project Lives Up front investment
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