Q20. 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) 26.0.
B) 36.0.
C) 30.0.
答案和详解如下：
Q20. 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) 26.0.
B) 36.0.
C) 30.0.
Correct answer is A)
There are three components that Stone will need to calculate Soft Corporation's projected net cash flow from financing activities, issuance of long-term debt, issuance of common stock, and payment of cash dividends. The calculation will be the same under both the direct and indirect methods and is as follows:
(40.0 – 20.0) + (10.0) – (4.0) = 26.0
The issuance of common stock is from the exercise of the employee stock options. The correct choice is 26.0.
focus
-
thanks
a
thanks
| 欢迎光临 CFA论坛 (http://forum.theanalystspace.com/) | Powered by Discuz! 7.2 |