Reading 34: Understanding the Cash Flow Statement - LOS f, following, company, border, center, about

mayanfang1

Q12. An analyst has gathered the following information about a company:

Income Statement 2005
Sales				$650
Expenses
	COGS		$445
	Depreciation		10
	Selling, General & Admin.		112
	Interest		10
		Total expenses		577
Pre-tax income				$73
Taxes				29
Net income				$44

 

Balance Sheet
Assets	2004	2005		Liabilities	2004	2005
Cash	50	35		Accts. Payable	115	90
Accts. Rec.	120	140		Wages Payable	55	50
Inventories	75	70		Bonds	100	90
Fixed Assets	215	190		Common Stock	50	20
Accum. Depr.	(95)	(105)		Retained Earnings	45	80
Total	365	330			365	330

Note: the dividend payout ratio equals 20%.

What is the net increase or decrease in cash?

A)   +$15.

B)   -$15.

C)   +$43.

mayanfang1

答案和详解如下：

Correct answer is B)

There are two ways to approach this problem. The easier way is to just take the difference in cash from the two years: $35 − $50 = -$15.

The harder way is to create a statement of cash flows:

CFO = Net Income (44) + (Depreciation) (10) – (increase in Accounts Receivable) (20) + (decrease in Inventory) (5) – (decrease in Accounts Payable) (25) – (decrease in Wages Payable) (5) = $9.

CFI = $25 (fixed assets decreased by $25 representing a source of cash)

CFF = Dividends paid ((0.20) × (44)) = -9 – (decrease in bonds) (10) − (decrease in common stock) (30) = -$49.

The net change in cash = 9 + 25 – 49 = -$15, or a decrease of $15.

 

gracesun

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Laura17

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mcdullpong

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wangyoucao

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ltj_2002

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hjl2000

d

connie198226

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leyan6042

B