Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.
Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.
Cash flows from operating activities: These are the cash produced by the normal business operations.
The below table shows the way of calculation of cash flows from operating activities:
Cash flows from operating activities (Indirect method) |
Add: Decrease in current assets |
Increase in current liability |
Depreciation expense and amortization expense |
Loss on sale of plant assets |
Deduct: Increase in current assets |
Decrease in current liabilities |
Gain on sale of plant assets |
Net cash provided from or used by operating activities |
Table (1)
To Compute: Net cash flows from operating activities under indirect method.
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Chapter 13 Solutions
Corporate Financial Accounting
- Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2, rounding to one decimal place, including percentages, except for per-share amounts: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardChanges in current operating assets and liabilities-indirect method Covington Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, Dec. 31, Accounts 20Y2 20Y1 $25,300 $24,900 receivable Inventory 67,200 67,900 Accounts 28,100. 26,900 payable Dividends 18,000 payable 17,000 Adjust net income of $76,400 for changes in operating assets and liabilities to arrive at net cash flows from operating activities. Check My Work 5 more Check My Work uses remaining.arrow_forwardCurrent Attempt in Progress  XYZ provided the following financial information: XYZBalance SheetAs of 12/31/19 Assets:    Liabilities and Equity:       Cash and marketable securities  $27,476     Accounts payable and accruals  $154,860     Accounts receivable  $143,519     Short-term notes payable  $21,255     Inventory  $212,379     Total current liabilities  $176,115     Total current assets  $383,374     Long term debt  $155,510     Net plant and equipment  $602,704     Total liabilities  $331,625     Goodwill and other assets  $42,422     Common stock  $312,719         Retained earnings  $384,156        Total assets  $1,028,500        Total liabilities and equity  $1,028,500  In addition, it was reported that the firm had a net income of:  $158,402 and net sales of:  $4,272,431 Calculate the following ratios for this firm (Use 365 days for calculation. Round answers to 2 decimal places, e.g.…arrow_forward
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- Return on Total Assets A company reports the following income statement and balance sheet information for the current year: Net income $418,290 Interest expense 73,810 Average total assets 3,700,000 Determine the return on total assets. If required, round the answer to one decimal place.fill in the blank 1 %arrow_forwardCurrent Position Analysis The following data were taken from the balance sheet of Albertini Company at the end of two recent fiscal years:  Current Year  Previous Year Current assets:        Cash $620,200   $495,600    Marketable securities 718,100   557,600    Accounts and notes receivable (net) 293,700   185,800    Inventories 314,200   179,900    Prepaid expenses 161,800   115,100     Total current assets $2,108,000   $1,534,000  Current liabilities:        Accounts and notes payable       (short-term) $394,400   $413,000    Accrued liabilities 285,600   177,000     Total current liabilities $680,000   $590,000   a.  Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.    Current Year   Previous Year 1.  Working capital $fill in the blank 1 $fill in the blank 2 2.  Current ratio fill in the blank 3 fill in the blank 4…arrow_forwardCurrent Position Analysis The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 20Y9 and December 31, 20Y8: Dec. 31, 20Y9 Dec. 31, 20Y8 Cash $361,500 $268,700 Temporary investments 385,700 294,400 Accounts and notes receivable (net) 354,800 320,900 Inventories 495,900 397,800 Prepaid expenses 374,100 122,200 Total current assets $1,972,000 $1,404,000 Accounts payable $336,400 $364,000 Accrued liabilities 243,600 156,000 Total current liabilities $580,000 $520,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. 20Y9 20Υ8 Working capital $ 2$ Current ratio Quick ratioarrow_forward
- Cash Accounts receivable Inventory Plant and equipment Total assets Assets a. Current ratio b. Quick ratio rporation is given below. Sales for the year were $3,240,000, with 75 percent of sales s BRYAN CORPORATION Balance Sheet Dec. 31, 20XX $50,000 440,000 450,000 510,000 $1,450,000 C. Debt-to-total-assets ratio. d. Asset turnover e. Average collection period Liabilities and Equity Accounts payable Accrued taxes Bonds payable (long term) Common stock Retained earnings Total liabilities and equity Compute the following ratios: (Use 365 days in a year. Do not round intermediate calculation. Round the final answer places.) 2.38 X X % X days $320,000 75,000 350,000 480,000 225,000 $1,450,000arrow_forwardCurrent Position Analysis The following data were taken from the balance sheet of Albertini Company at the end of two recent fiscal years:  Current Year Previous Year Current assets:   Cash $273,600 $201,600 Marketable securities 316,800 226,800 Accounts and notes receivable (net) 129,600 75,600  Inventories 760,300 589,300  Prepaid expenses 391,700 376,700  Total current assets $1,872,000 $1,470,000 Current liabilities:   Accounts and notes payable    (short-term) $278,400 $294,000 Accrued liabilities 201,600 126,000 Total current liabilities $480,000 $420,000 a.  Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.   Current Year Previous Year 1.  Working capital $ $ 2.  Current ratio   3.  Quick ratio   b.  The liquidity of Albertini has improved  from the preceding year to the current year. The working capital, current ratio, and quick ratio have…arrow_forwardS/380 Ratio Calculations Select the images below to enlarge. Balance Sheet Murawski Company Balance Sheet December 31 Current Assets Investments Cash and cash equivalents Accounts receivable (net) Property, plant, and equipment Intangibles and other assets Total assets Current liabilities Inventory Prepaid expenses Total current assets Sales Revenue $900 410 Long-term liabilities Stockholder's equity - common 1,030 Total liabilities and stockholder's equity $2,340 Murawski Company Income Statement For the Years Ended December 31 Costs and expenses Income Statement Cost of goods sold Selling and Administrative expenses Interest expense Total costs and expenses 2022 Income before income taxes $330 470 460 120 1,380 Income tax expense Net Income 10 420 530 $2,340 2022 $3,800 955 2,400 25 3,380 420 126 $294 2021 $360 400 390 160 1,310 10 380 510 $2,210 $790 380 1,040 $2,210 2021 $3,460 890 2,330 20 3,240 220 66 $154 Calculate the 2021 current ratio. Use whole numbers rounded to 2 decimal…arrow_forward
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