21.An analyst contemplates using the indirect methods to create the projected statement of cash flows. She decides to research the differences between the direct and indirect methods. Which of the following statements is TRUE? Under the: A) indirect method, depreciation must be added to net income, because it is a non-cash expense. B) indirect method, changes in accounts receivable are already included in the net income figure. C) direct method, depreciation must be added to cash collections because it is a non-cash expense. D) direct method, cash flow from operations may be different than under the indirect method.
22.An analyst contemplates using the indirect method to create the projected statement of cash flows. She decides to research the differences between the direct and indirect methods. Which of the following is NOT a component of the statement of cash flows under the direct method? A) Property, Plant, & Equipment. B) Cash taxes. C) Net income. D) Payment of dividends.
23.John Stone, CFA, is an investment advisor specializing in the preparation of company and industry reports for high net worth customers at Learmon Brothers. Currently, Stone is preparing a report on Soft Corporation, a rapidly growing software company. The explosive growth of this company was financed primarily by an initial public offering in which 3,000,000 shares were issued at a price of $20 per share on June 27, 2004. Soft Corporation received additional capital when employee stock options for 1,000,000 shares at a price of $10 were exercised on January 1, 2005. Stone realizes the importance of cash flow on a company's financial health and would like to include a projected statement of cash flows for 2005. Soft Corporation financial statements are presented in Tables 1 and 2. Included are the projected statements for the year ending December 31, 2005. Table 1
| Soft Corporation Balance Sheets | as of December 31
| (in millions)
|
| Actual 2004
| Projected 2005
| Cash | $24.0 | $26.0 | Accounts Receivable | 17.0 | 24.0 | Inventory | 100.0 | 150.0 | PP&E | 100.0 | 125.0 | Accumulated depreciation | (30.0)
| (35.0)
|
| Total Assets | $211.0 | $290.0 |
| Accounts payable | $91.0 | $101.0 | Long-term debt | 20.0 | 40.0 | Common stock | 80.0 | 90.0 | Retained earnings | 20.0
| 59.0
|
| Total liabilities and equity | $211.0 | $290.0 |
Table 2
| Soft Corporation Income Statement
| for Years Ended December 31
| (in millions except per share data)
|
| Actual 2004
| Projected 2005
| Sales | $80.0 | $198.0 | COGS | (38.0)
| (90.0)
|
| Gross profit | $42.0 | $108.0 |
| SG&A | (13.0) | (30.0) | Depreciation | (3.0)
| (5.0)
|
| Operating expenses | $(16.0) | $(35.0) |
| Interest expense | $(4.0) | $(5.0) |
| Pretax Income | 22.0 | 68.0 | Income tax expense | (7.0)
| (25.0)
| Net income | $15.0 | $43.0 |
| EPS | $2.0 | $4.3 |
| Average shares outstanding (millions) | 7.5 | 10.0 | Dividends per share | $0.1 | $0.4 |
Stone decides to use the direct method to compute Soft Corporation's projected net cash flow from financing activities. Under this method, what will Stone report Soft Corporation's projected net cash flow from financing activities to be for 2005 (in millions)? A) 30.0. B) 26.0. C) 36.0. D) 86.0. | 
发表于 2008-4-11 18:09
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