Q18. 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.

Stone decides to use the direct method to compute Soft Corporation's projected operating cash collections. Using this method, which of the following is Soft Corporation's projected operating cash collections for the year ending December 31, 2005 (in millions)?

A)   198.0.

B)   1.0.

C)   191.0.

Q19. Stone decides to use the direct method to compute Soft Corporation's projected cash inputs. Under this method, what will Soft Corporation's projected cash outflow inputs into the manufacturing process be for the year ending December 31, 2005 (in millions)?

A)   +90.0.

B)   -80.0.

C)   -130.0.

答案和详解如下：

Q18. 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.

Stone decides to use the direct method to compute Soft Corporation's projected operating cash collections. Using this method, which of the following is Soft Corporation's projected operating cash collections for the year ending December 31, 2005 (in millions)?

A)   198.0.

B)   1.0.

C)   191.0.

Correct answer is C)

Under the direct method, cash collections are found by subtracting the change in accounts receivable from total sales. This is done because an increase in receivables indicates sales that were made on credit. In the case of Soft Corporation, the calculation is as follows:

198.0 – (24.0 – 17.0) = 191.0

Therefore, the correct answer is 191.0. Financing activities and expenses are not included in cash collections from operating activities.

Q19. Stone decides to use the direct method to compute Soft Corporation's projected cash inputs. Under this method, what will Soft Corporation's projected cash outflow inputs into the manufacturing process be for the year ending December 31, 2005 (in millions)?

A)   +90.0.

B)   -80.0.

C)   -130.0.

Correct answer is C)

Under the direct method cash inputs = -COGS + decrease in inventory + increase in accounts payable. The calculation for Soft Corporation’s projected cash inputs is as follows:

-90.0 − (150.0 − 100.0) + (101.0 − 91.0) = -130.0

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