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. 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 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.
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发表于 2009-1-17 11:41
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