Exam 3: Income Flows Versus Cash Flows: Key Relationships in the Dynamics of a Business

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

Which of the following is not one of the reasons why net income differs from cash flows from operations under the indirect method of calculating cash flows?

Lagos Corp. recorded sales of $345,000 in 2006, in addition its accounts receivable and accounts payable balances at the beginning and end of 2006 were as follows: How much cash did Lagos collect from customers in 2006?

An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

____________________ activities relate to the normal operations of the firm, selling goods and providing services.

Outback Corp. recorded sales of $1,300,000 in 2006, in addition the company's accounts receivable balance grew from $120,000 at the beginning of 2006 to $165,000 at the end of 2006. How much cash did Outback collect from customers in 2006?

The receipt of cash when employees exercise stock options is a (an) ____________________ activity.

For the following types of companies discuss whether you think their cash flows from operations, investing and financing will be positive (the activity provides cash) or negative (the activity uses cash). Provide support for your answer.

The issuance of debt would be classified as a (an) ____________________ activity in the statement of cash flows.

Under the _________________________, firms begin with net income to calculate cash flow from operations for the period.

Which of the following is the correct formula for calculating cash collections from customers?

Free cash flows to all debt and common equity shareholders represents the excess of cash flows from

The receipt of dividends from an investee would be classified as ____________________ activities in the statement of cash flows.

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 2002 to 2004 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.

Toro Company recognized $655,000 of cost of goods sold in 2006, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2006. How much cash did Toro spend for inventory in 2006?

Normally, cash flows from financing will start using cash during which phase of the product life cycle?

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.

When preparing the statement of cash flows using the indirect method the purchase of equipment would appear as