Business Analysis for Investment (FNCE2003)
Module 4
Understanding Balance Sheet and Cash Flow Statements
Question 1:
Assuming U.S. GAAP, use the following data to answer the questions:
|
Net Income |
$45 |
|
Depreciation |
75 |
|
Taxes paid |
25 |
|
Interest paid |
5 |
|
Dividends paid |
10 |
|
Cash received from sale of company building |
40 |
|
Issuance of preferred stock |
35 |
|
Repurchase of common stock |
30 |
|
Purchase of machinery |
20 |
|
Issuance of bonds |
50 |
|
Debt retired through issuance of common stock |
45 |
|
Paid off long-term bank borrowing |
15 |
|
Profit on sale of building |
20 |
a. What is the cash flow from operation?
b. What is the cash flow from investment activities?
C. What is the cash flow from financing activities?
Question 2:
Below is the income statement data of Jones Inc.
|
Sales |
$1500 |
|
Increase in inventory |
100 |
|
Depreciation |
150 |
|
Increase in accounts receivable |
50 |
|
Decrease in accounts payable |
70 |
|
After tax profit margin |
25% |
|
Gain on sale of machinery |
$30 |
Based on the above information, what is the Cash flow from operation for Jones Inc.?
Question 3:
Adelaide Brighton Company recorded the following in Year 2015:
Proceeds from issuance of long-term debt $300,000
Purchase of equipment $200,000
Payment for inventory $50,000
Loss on sale of equipment $70,000
Stock repurchase $9,000
Proceeds from sale of equipment $220,000
Equity in earnings of affiliate $10,000
On the Year 2015 statement of cash flows, what the company would report as net cash flow from investing activities?
Question 4:
Green Flag., a retailer of floral products, reported cost of goods sold for the year of $85 million. Total assets increased by $35 million, but inventory declined by $7 million. Total liabilities increased by $40 million, and accounts payable increased by $8 million. What is the amount of cash paid by the company to its suppliers?
Question 5:
Following are the information gathered from a company’s 2010 financial state ments (in $ millions):
|
Year ended 31 December |
2009 |
2010 |
|
Net sales |
265.4 |
277.4 |
|
Cost of goods sold |
168.3 |
187.9 |
|
Accounts receivable |
77.8 |
68.8 |
|
Inventory |
37.4 |
47.8 |
|
Accounts payable |
28.3 |
32.9 |
|
Property and equipment |
185.5 |
195.6 |
Based only on the information above, what would the company’s 2010 statement of cash flows in the direct format include amounts (in $ millions) for cash received from customers and cash paid to suppliers?
Question 6:
Blue Bayou, an advertising company, reported revenues of $80 million, total expenses of $35 million, cash and marketable securities $2million and net income of $15 million in the most recent year. If accounts receivable decreased by $22 million and accounts payable increase by 8 million, how much cash did the company receive from customers?
Question 7:
Blue Beverages Plc., a manufacturer of tropical drinks, reported cost of goods sold for the year of $120 million. Total assets increased by $55 million, accounts receivable increase by $120 million but inventory declined by $25 million. Total liabilities increased by $45 million, but accounts payable decreased by $5 million. How much cash did the company pay to its suppliers during the year?
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