Salud Company reports net income of $400,000 for the year ended December 31, 2013. It also reports $80,000 depreciation' data-toggle="tooltip" data-placement="top" title="Click to view definition...">depreciation expense and a $20,000 gain on the sale of machinery. Its comparative balance sheets reveal a $40,000 increase in accounts receivable, $6,000 increase in accounts payable, $12,000 decrease in prepaid expenses, and $2,000 decrease in wages payable. Required Prepare only the operating activities section of the statement of cash flows for 2013 using the indirect method.
> Refer to Gazelle Corporation’s financial statements and related information in Problem 12-1B. RequiredPrepare a complete statement of cash flows; report its operating activities according to the direct method. Disclose any noncash inves
> Why is a company’s capital structure, as measured by debt and equity ratios, important to financial statement analysts?
> What is the difference between comparative financial statements and common-size comparative statements?
> Why would a company’s return on total assets be different from its return on common stockholders’ equity?
> You are to devise an investment strategy to enable you to accumulate $1,000,000 by age 65. Start by making some assumptions about your salary. Next compute the percent of your salary that you will be able to save each year. If you will receive any lump-s
> Refer to Golden Corporation’s financial statements and related information in Problem 12-4A. RequiredPrepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method. In Problem
> Assume that David and Tom Gardner of The Motley Fool (Fool.com) have impressed yousince you first heard of their rather improbable rise to prominence in financial circles. You learn of a staff opening at The Motley Fool and decide to apply for it. Your r
> A team approach to learning financial statement analysis is often useful. Required 1. Each team should write a description of horizontal and vertical analysis that all team members agree with and understand. Illustrate each description with an example.
> Access the February 17, 2012, filing of the December 31, 2011, 10-K report of The Hershey Company (ticker HSY) at www.sec.gov and complete the following requirements. Required Compute or identify the following profitability ratios of Hershey for its yea
> As Beacon Company controller, you are responsible for informing the board of directorsabout its financial activities. At the board meeting, you present the following information. After the meeting, the company’s CEO holds a press conf
> Key figures for Polaris and Arctic Cat follow. Required1. Compute common-size percents for each of the companies using the data provided. (Round percents to one decimal.) 2. Which company retains a higher portion of cumulative net income in the company
> Refer to the information reported about Gazelle Corporation in Problem 12-1B. RequiredPrepare a complete statement of cash flows using a spreadsheet as in Exhibit 12A.1; report its operating activities using the indirect method. Identify the debits and
> Your friend, Diana Wood, recently completed the second year of her business and just received annual financial statements from her accountant. Wood finds the income statement and balance sheet informative but does not understand the statement of cash flo
> Jenna and Matt Wilder are completing their second year operating Mountain High, a downhill ski area and resort. Mountain High reports a net loss of $(10,000) for its second year, which includes an $85,000 extraordinary loss from fire. This past year also
> KTM (www.KTM.com), which is a leading manufacturer of offroad and street motorcycles, along with Polaris and Arctic Cat, are competitors in the global marketplace. Key figures for KTM follow (in Euro thousands). Cash and equivalents . . . . . . . . . .
> Adria Lopez, owner of Success Systems, decides to prepare a statement of cash flows for herbusiness. (Although the serial problem allowed for various ownership changes in earlier chapters, we will prepare the statement of cash flows using the following f
> Compute cash flows from financing activities using the following company information. Additional short-term borrowings . . . . . . . . . . $20,000 Purchase of short-term investments . . . . . . . . 5,000 Cash dividends paid . . . . . . . . . . . . . . .
> Refer to the information reported about Golden Corporation in Problem 12-4A. RequiredPrepare a complete statement of cash flows using a spreadsheet as in Exhibit 12A.1; report operating activities under the indirect method. Identify the debits and credi
> Compute cash flows from investing activities using the following company information. Sale of short-term investments . . . . . . . . . . $ 6,000 Cash collections from customers . . . . . . . . . 16,000 Purchase of used equipment . . . . . . . . . . . .
> Refer to the data in QS 12-6. 1. How much cash is received from sales to customers for year 2013? 2. What is the net increase or decrease in cash for year 2013? In QS 12-6 CRUZ, INC. Comparative Balance Sheets December 31, 2013 2013 2012 Assets Ca
> Use the following information to determine this company’s cash flows from operating activities using the indirect method. MOSS COMPANY Income Statement MOSS COMPANY For Year Ended December 31, 2013 Selected Balance Sheet Informatio
> Classify the following cash flows as operating, investing, or financing activities. 1. Sold long-term investments for cash. 2. Received cash payments from customers. 3. Paid cash for wages and salaries. 4. Purchased inventories for cash. 5. Paid cash d
> Arundel Company disclosed the following information for its recent calendar year. Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 Expenses Salaries expense . . . . . . . . . . . . . . . . . . . . . . 84,000 Utilities expense .
> Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method, and (2) analyze and briefly discuss the statement prepared in part 1 with specia
> For each of the following separate cases, compute cash flows from operations. The list includes all balance sheet accounts related to operating activities. Case X Case Y Case Z $ 4,000 $100,000 $72,000 Net income . Depreciation expense 30,000 8,000
> Use the following information about the cash flows of Ferron Company to prepare a complete statement of cash flows (direct method) for the year ended December 31, 2013. Use a note disclosure for any noncash investing and financing activities. Cash and ca
> When a spreadsheet for a statement of cash flows is prepared, all changes in noncash balance sheet accounts are fully explained on the spreadsheet. Explain how these noncash balance sheet accounts are used to fully account for cash flows on a spreadsheet
> Review the chapter’s opener involving TOMSand its young entrepreneurial owner, Blake Mycoskie. Required 1. In a business such as TOMS, monitoring cash flow is always a priority. Even though TOMS now has thousands in annual sales and earns a positive net
> Financial data from three competitors in the same industry follow. 1. Which of the three competitors is in the strongest position as shown by its statement of cash flows?2. Analyze and compare the strength of Moore’s cash flow on total
> Golden Corp., a merchandiser, recently completed its 2013 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all deb
> Refer to the data in QS 12-6. Use the direct method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company. In QS 12-6 CRUZ, INC. Comparative Balance Sheets December 31, 2013 201
> Refer to the data in QS 12-6. 1. How much cash is paid to acquire merchandise inventory during year 2013? 2. How much cash is paid for operating expenses during year 2013? In QS 12-6 CRUZ, INC. Comparative Balance Sheets December 31, 2013 2013 201
> Refer to the data in QS 12-6. 1. Assume that all common stock is issued for cash. What amount of cash dividends is paid during 2013?2. Assume that no additional notes payable are issued in 2013. What cash amount is paid to reduce the notes payable balanc
> Gazelle Corporation, a merchandiser, recently completed its calendar-year 2013 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on
> Refer to the data in QS 12-6. Furniture costing $55,000 is sold at its book value in 2013. Acquisitions of furniture total $45,000 cash, on which no depreciation is necessary because it is acquired at year-end. What is the cash inflow related to the sale
> Use the following balance sheets and income statement to answer QS 12-6 through QS 12-11. RequiredUse the indirect method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company.
> The following selected information is from the Princeton Company’s comparative balance sheets. The company’s net income for the year ended December 31, 2013, was $48,000. 1. Compute the cash received from the sale of
> The following selected information is from Ellerby Company’s comparative balance sheets. The income statement reports depreciation expense for the year of $18,000. Also, furniture costing $52,500 was sold for its book value. Compute t
> Complete the following spreadsheet in preparation of the statement of cash flows. (The statement of cash flows is not required.) Prepare the spreadsheet as in Exhibit 12A.1; report operating activities under the indirect method. Identify the debits and c
> The statement of cash flows is one of the four primary financial statements. 1. Describe the content and layout of a statement of cash flows, including its three sections. 2. List at least three transactions classified as investing activities in a statem
> Answer each of the following related to international accounting standards. 1. Which method, indirect or direct, is acceptable for reporting operating cash flows under IFRS?2. For each of the following four cash flows, identify whether it is reported und
> Refer to Forten Company’s financial statements and related information in Problem 12-1A. RequiredPrepare a complete statement of cash flows; report its operating activities according to the direct method. Disclose any noncash investing
> Team members are to coordinate and independently answer one question within each of the following three sections. Team members should then report to the team and confirm or correct teammates’ answers. 1. Answer one of the following questions about the st
> Refer to the information in Problem 12-7B. RequiredPrepare the cash flows from operating activities section only of the company’s 2013 statement of cash flows using the direct method. In Problem 12-7B Salt Lake Companyâ€
> Refer to the information reported about Forten Company in Problem 12-1A. RequiredPrepare a complete statement of cash flows using a spreadsheet as in Exhibit 12A.1; report its operating activities using the indirect method. Identify the debits and credi
> Use the following information to determine this company’s cash flows from investing activities. a. Equipment with a book value of $65,300 and an original cost of $133,000 was sold at a loss of $14,000. b. Paid $89,000 cash for a new truck. c. Sold land c
> Refer to the information about Sonad Company in Exercise 12-6. Use the direct method to prepare only the cash provided or used by operating activities section of the statement of cash flows for this company. In Exercise 12-6 The following income stateme
> Information: The following income statement and information about changes in noncash current assets and current liabilities are reported. Changes in current asset and current liability accounts for the year that relate to operations follow. Accounts r
> For each of the following three separate cases, use the information provided about the calendar-year 2014 operations of Sahim Company to compute the required cash flow information. Case X: Compute cash received from customers: Sales . . . . . . . . . .
> Katie Murphy is preparing for a meeting with her banker. Her business is finishing its fourth year of operations. In the first year, it had negative cash flows from operations. In the second and third years, cash flows from operations were positive. Howe
> Fitzpatrick Company’s calendar-year 2013 income statement shows the following: Net Income, $374,000; Depreciation Expense, $44,000; Amortization Expense, $7,200; Gain on Sale of Plant Assets, $6,000. An examination of the company’s current assets and cur
> The following transactions and events occurred during the year. Assuming that this company uses the direct method to report cash provided by operating activities, indicate where each item would appear on the statement of cash flows by placing an x in the
> The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an x in t
> Peugeot S.A. reports the following financial information for the year ended December 31, 2011 (euros in millions). Prepare its statement of cash flows under the indirect method. Net income € 784 Cash paid for purchase of treasury stock and other...
> Refer to KTM’s 2011 statement of cash flows in Appendix A. List its cash flows from operating activities, investing activities, and financing activities.
> On June 3, a company borrows $200,000 cash by giving its bank a 90-day, interest-bearing note. On the statement of cash flows, where should this be reported?
> Where on the statement of cash flows is the payment of cash dividends reported?
> Describe the indirect method of reporting cash flows from operating activities.
> Describe the direct method of reporting cash flows from operating activities.
> If a company reports positive net income for the year, can it also show a net cash outflow from operating activities? Explain.
> Key figures for Polaris and Arctic Cat follow. Required1. Compute the recent two years’ cash flow on total assets ratios for Polaris and Arctic Cat. 2. What does the cash flow on total assets ratio measure? 3. Which company has the hi
> Assume that a company purchases land for $1,000,000, paying $400,000 cash and borrowing the remainder with a long-term note payable. How should this transaction be reported on a statement of cash flows?
> When a statement of cash flows is prepared using the direct method, what are some of the operating cash flows?
> What are some financing activities reported on the statement of cash flows?
> What are some investing activities reported on the statement of cash flows?
> Refer to Piaggio’s statement of cash flows in Appendix A. What investing activities result in cash outflows for the year ended December 31, 2011? List items and amounts.
> What is the reporting purpose of the statement of cash flows? Identify at least two questions that this statement can answer.
> Use the following selected data from Success Systems’ income statement for the three months ended March 31, 2014, and from its March 31, 2014, balance sheet to complete the requirements below: computer services revenue, $25,160; net sales (of goods), $18
> A review of the notes payable files discovers that three years ago the company reported the entire amount of a payment (principal and interest) on an installment note payable as interest expense. This mistake had a material effect on the amount of income
> Compute the annual dollar changes and percent changes for each of the following accounts. 2013 2012 Short-term investments $374,634 $234,000 Accounts receivable 97,364 101,000 Notes payable 88,000
> Refer to the information in QS 13-2. Use that information for Tide Corporation to determine the 2012 and 2013 common-size percents for cost of goods sold using net sales as the base. In QS 13-2 (S thousands) 2013 2012 Net sales $801,810 $453,000 Co
> Use the following information for Tide Corporation to determine the 2012 and 2013 trend percents for net sales using 2012 as the base year. (S thousands) 2013 2012 Net sales $801,810 $453,000 Cost of goods sold ... 392,887 134,088
> Which of the following items (a) through (i) are part of financial reporting but are not included as part of general-purpose financial statements? (a) balance sheet, (b) financial statement notes, (c) statement of shareholders’ equity, (d) prospectus,
> The following information is available for Morgan Company and Parker Company, similar firms operating in the same industry. Write a half-page report comparing Morgan and Parker using the available information. Your discussion should include their ability
> For each ratio listed, identify whether the change in ratio value from 2012 to 2013 is usually regarded as favorable or unfavorable. Ratio 2013 2012 Ratio 2013 2012 1. Profit margin 9% 5. Accounts receivable turnover 8% 5.5 6.7 2. Debt ratio 47% 6.
> What are four possible standards of comparison used to analyze financial statement ratios? Which of these is generally considered to be the most useful? Which one is least likely to provide a good basis for comparison?
> Answer each of the following related to international accounting and analysis. a. Identify a limitation to using ratio analysis when examining companies reporting under different accounting systems such as IFRS versus U.S. GAAP. b. Identify an advantage
> Refer to Arctic Cat’s statement of cash flows in Appendix A. What are its cash flows from financing activities for the year ended March 31, 2011? List the items and amounts.
> Selected account balances from the adjusted trial balance for Harbor Corp. as of its calendar year-end December 31, 2013, follow. RequiredAnswer each of the following questions by providing supporting computations. 1. Assume that the companyâ
> Summary information from the financial statements of two companies competing in the same industry follows. Required1. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable turnover, (d) inv
> Selected year-end financial statements of Overton Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, $17,400; total assets, $94,900; common stock, $35,500; and retained earnings, $18,800.)
> Koto Corporation began the month of June with $300,000 of current assets, a current ratio of 2.5:1, and an acid-test ratio of 1.4:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). June 1 Sold me
> Selected comparative financial statements of Tripoly Company follow. Required1. Compute trend percents for all components of both statements using 2008 as the base year. (Round percents to one decimal.) Analysis Component 2. Analyze and comment on the
> Selected comparative financial statement information of Bluegrass Corporation follows. Required1. Compute each year’s current ratio. (Round ratio amounts to one decimal.) 2. Express the income statement data in common-size percents.
> Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar yearend December 31, 2013, follow. RequiredAnswer each of the following questions by providing supporting computations. 1. Assume that the companyâ
> Summary information from the financial statements of two companies competing in the same industry follows. Required1. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable turnover, (d) inv
> Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, $48,900; total assets, $189,400; common stock, $90,000; and retained earnings, $22,748.)
> Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, and an acid-test ratio of 1.10:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchas
> Refer to Polaris’s statement of cash flows in Appendix A. (a) Which method is used to compute its net cash provided by operating activities? (b) Its balance sheet shows an increase in accounts (trade) receivables from 2010 to 2011; why is this increase
> Selected comparative financial statements of Haroun Company follow. Required1. Compute trend percents for all components of both statements using 2008 as the base year. (Round percents to one decimal.) Analysis Component 2. Analyze and comment on the
> Selected comparative financial statements of Korbin Company follow. Required1. Compute each year’s current ratio. (Round ratio amounts to one decimal.) 2. Express the income statement data in common-size percents. (Round percents to
> 1. Which two ratios are key components in measuring a company’s operating efficiency? Which ratio summarizes these two components? 2. What measure reflects the difference between current assets and current liabilities? 3. Which two short-term liquidity r
> Match the ratio to the building block of financial statement analysis to which it best relates. A. Liquidity and efficiency B. Solvency C. Profitability D. Market prospects 1. Equity ratio 2. Return on total assets 3.
> Use the financial data for Randa Merchandising, Inc., in Exercise 13-13 to prepare its income statement for calendar year 2013. (Ignore the earnings per share section.) Exercise 13-13: Section Item Debit Credit I. Net sales. 2. Gain on state's conde
> In 2013, Randa Merchandising, Inc., sold its interest in a chain of wholesale outlets, taking the company completely out of the wholesaling business. The company still operates its retail outlets. A listing of the major sections of an income statement fo
> Refer to Simon Company’s financial information in Exercises 13-7 and 13-9. Additional information about the company follows. To help evaluate the company’s profitability, compute and interpret the following ratios for
> Refer to Simon Company’s financial information in Exercises 13-7 and 13-9. Evaluate the company’s efficiency and profitability by computing the following for 2014 and 2013: (1) profit margin ratio—per
> Refer to the Simon Company information in Exercises 13-7 and 13-9. Compare the company’s long-term risk and capital structure positions at the end of 2014 and 2013 by computing these ratios: (1) debt and equity ratios—
> Refer to the Simon Company information in Exercise 13-7. The company’s income statements for the years ended December 31, 2014 and 2013, follow. Assume that all sales are on credit and then compute: (1) days’ sales un
> Is depreciation a source of cash flow?
