Question

7-10 The consolidate balance sheets for Loyd Lumber Company at the beginning and end of 2015 w follow. The company bought $50 million worth of fixed assets. The charge for depreciation in 2015 was $10 million. Net income was $33 million and the company paid put $5 million in dividends.

You must show the computations of each exercise in order to evaluate all the steps you took to reach the final result.

a- Fill in the amount of the source or use the appropriate column

b- Prepare a statement of cash flows.

c- Briefly summarize your findings.

	Jan 1	Dec 31	Source	Use
cash	$7	$15
Marketable securities	0	11
Net receivables	30	22
Inventories	53	75
Total current assets	$ 90	$123
Gross fixed assets	75	125
Less: Accumulated depreciation	(25)	(35)
Net fixed assets	$50	$90
Total assets	$140	$213
Accounts payable	$18	$15
Notes payable	3	15
Other current liabilities	15	7
Long-term debt	8	24
Total liabilities	$44	$61
Common stock	29	57
Retained earnings	67	95
Total liabilities and equity	$140	$213

Answer 1

a)

Formula spreadsheet for a

b)

Formula spreed sheet for b

c)

	Findings
1	The operating cash flow is positive which signifies that the company is able to meet its operating expenses from its operating income
2	The investing activity has been funded by the surplus from financing activity. This is essentially a good strategy , to meet your long term investing needs from long term financing source