Exam 3: Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Jarrett Company, home improvement retailer, reported cost of goods sold of $33,729 million for the fiscal year ended January 30, 2010. It reported merchandise inventories of $9,611 million at the beginning of fiscal 2010 and $10,209 million at the end of fiscal 2010. It reported accounts payable to suppliers of $5,713 million at the beginning of fiscal 2010 and $6,109 million at the end of fiscal 2010. Compute the amount of cash paid to merchandise suppliers during fiscal 2010.

Selected financial statement information for Filmco appears below: Balance Sheet accounts Jan. 1,2010 Dec. 31,2010 Inventory \2 10,000 \3 40,000 AccountsReceivable \8 5,000 \6 0,000 Sales Cost of Goods Sold Gross Profit \ 824,000 \ 166,000 Calculate the amount of cash collected from customers and the amount of cash spent on inventory for 2010 by Filmco.

Cash collected from customers would appear in the operating activities section of a statement of cash flows prepared using the ____________________ method

Under the indirect method of preparing the statement of cash flows, addbacks to net income include all of the following except:

Which of the following is a cash flow from operating activities?

The acquisition of new investments would be classified as ____________________ activities in the statement of cash flows.

Normally, cash flows from operations will peak during which phase of the product life cycle?

As a complement to the balance sheet and the income statement, the statement of cash flows is an informative statement for analysts for all the following reasons except:

When preparing the statement of cash flows using the indirect method, the payment of dividends would appear as

Cash flows from ____________________ activities will normally be negative during all of the introduction and growth phase of the product life cycle.

J. Jill is a women's clothing retailer. The company started as a mail order company and has expanded into mall department stores. The company now receives approximately half of its revenues from mail order and half from retail outlets. Over the time period 2010 to 2012, sales increased approximately 25%. Discuss the relationship between net income, working capital from operations, and cash flow from operations, and between cash flows from operating, investing, and financing activities over the three-year period. CASH FLOW STATEMENT (in thousands) Cash from operations Net income Depreciation \& amoitization Net increase (decrease) in assets \& liab. Other adjustments, net Net cash provided by (used in) operations Cash from investinents (Increase) decrease in property \& plant Other cash inflow (outflow) Net cash provided by (used in) irvesting Cash from financing Issuances (purchases) of equity shares Increase (decrease) in borrowings Net cash provided by (used in) financing Net change cash \& cash equivalents Cash and cash equivalents at stant of year Cash and cash equivalents at year end 12/25/2012 8,706 18,663 6,696 1,396 35,461 -28,784 -35,434 -64,218 3,142 -1,706 1,436 - -27,321 59,287 31,966 12/27/2011 7,025 116,131 26,659 924 50,739 -34,265 -1,143 -35,408 870 -1,648 -778 - 14,553 44,734 59,287 12/28/2010 18,434 12,672 10,623 3,996 45,725 -34,734 -2,454 -37,188 7,800 -1,755 -6,045 - 14,582 30,152 44,734

The expense incurred by issuing stock options should be

The calculation of cash flow from operations under the indirect method involves two types of adjustments. Discuss each type of adjustment and provide an example of each type of adjustment.

Which of the following statements is false?

Krenshaw Company reported total sales revenue of $80,000, total expenses of $72,000, and net income of $8,000 for the year ended December 31, 2009. During 2009, accounts receivable increased by $3,000, merchandise inventory decreased by $2,000, accounts payable increased by $1,000, and $5,000 in depreciation expense was recorded. Assuming no other adjustments to net income are needed, the net cash inflow from operating activities using the indirect method was

Under the ______________________________ of preparing the statement of cash flow's operating activities section firms list the cash flows from selling goods and services and then subtract the cash outflows to providers of goods and services.

____________________ activities relate to transactions between the firm and its creditors and owners.

Lagos Corp. recorded sales of $345,000 in 2010, in addition its accounts receivable and accounts payable balances at the beginning and end of 2010 were as follows: Jan. 1, 2010 Dee.31, 2010 A.cornts Receivible \ 65,000 \9 0,000 A.cedrts Fayable \ 32,000 \2 8,000 How much cash did Lagos collect from customers in 2010?

While preparing a statement of cash flows, you encountered the following transaction: February 1, 2011: Galvinize Corporation acquired a small office building in exchange for 5,000 shares of its own common stock; par value $10 per share; market value $15 per share. A. Should this transaction be shown on the statement of cash flows? B. Why or why not?

Many analysts use ____________________ as a crude measure of a firm's ability to pay down debt.