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

mayanfang1

Q16. An analyst has gathered the following information about a company:

Income Statement for the Year 2004
Sales							$1,500
Expenses
	COGS					$1,300
	Depreciation					30
	Int. Expenses					40
					Total expenses		1,370
Income from cont. op.							130
				Gain on sale			30
Income before tax							160
Income tax							64
Net Income							$96

 

Additional Information:
Dividends paid	$30
Common stock sold	20
Equipment purchased	50
Bonds issued	80
Fixed asset sold for (original cost of $100 with accumulated depreciation of $70)	60
Accounts receivable decreased by	30
Inventory decreased by	20
Accounts payable increased by	20
Wages payable decreased by	10

What is the cash flow from operations?

A)   $156.

B)   $170.

C)   $135.

Q17. The Beeline Company has the following balance sheet and income statement.

Beeline Company Balance Sheet
As of December 31, 2004
	2003	2004				2003	2004
Cash	$50	$60		Accounts payable		$100	$150
Accounts receivable	100	110		Long-term debt		400	300
Inventory	200	180		Common stock		50	50
				Retained earnings		400	500
Fixed assets (gross)	800	900		Total liabilities and equity		$950	$1,000
Less: Accumulated depreciation	200	250
Fixed assets (net)	600	650
Total assets	$950	$1,000
Beeline Company Income Statement
For year ended December 31, 2004
Sales			$1,000
Less:
COGS			600
Depreciation			50
Selling, general, and administrative expenses			160
Interest expense			23
Income before taxes			$167
Less tax			67
Net income			$100

The cash flow from operations for 2004 is:

A)   $210.

B)   $260.

C)   $150.

mayanfang1

答案和详解如下：

Q16. An analyst has gathered the following information about a company:

Income Statement for the Year 2004
Sales							$1,500
Expenses
	COGS					$1,300
	Depreciation					30
	Int. Expenses					40
					Total expenses		1,370
Income from cont. op.							130
				Gain on sale			30
Income before tax							160
Income tax							64
Net Income							$96

 

Additional Information:
Dividends paid	$30
Common stock sold	20
Equipment purchased	50
Bonds issued	80
Fixed asset sold for (original cost of $100 with accumulated depreciation of $70)	60
Accounts receivable decreased by	30
Inventory decreased by	20
Accounts payable increased by	20
Wages payable decreased by	10

What is the cash flow from operations?

A)   $156.

B)   $170.

C)   $135.

Correct answer is A)

Net Income		+$96
Depreciation		+30
Gain on sale of asset		-30
Accts. Rec.		+30
Inventory		+20
Accts. Payable		+20
Wage/Pay		-10
	CFO	+$156

Q17. The Beeline Company has the following balance sheet and income statement.

Beeline Company Balance Sheet
As of December 31, 2004
	2003	2004				2003	2004
Cash	$50	$60		Accounts payable		$100	$150
Accounts receivable	100	110		Long-term debt		400	300
Inventory	200	180		Common stock		50	50
				Retained earnings		400	500
Fixed assets (gross)	800	900		Total liabilities and equity		$950	$1,000
Less: Accumulated depreciation	200	250
Fixed assets (net)	600	650
Total assets	$950	$1,000
Beeline Company Income Statement
For year ended December 31, 2004
Sales			$1,000
Less:
COGS			600
Depreciation			50
Selling, general, and administrative expenses			160
Interest expense			23
Income before taxes			$167
Less tax			67
Net income			$100

The cash flow from operations for 2004 is:

A)   $210.

B)   $260.

C)   $150.

Correct answer is A)

Cash flow from operations (CFO) calculated using the indirect method is: net income (100) + depreciation (50) – increase in accounts receivable (10) + decrease in inventory (20) + increase in accounts payable (50) = $210.

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