Question

In: Accounting

15. Show your calculation for the Operating Cash Flows & Dividends Ratio (Cash generated by or...

15. Show your calculation for the Operating Cash Flows & Dividends Ratio (Cash generated by or (used in) operating activities/Dividends) to two decimal places for the most recent three years.

2017: $64,225/$13,735=4.68

2016: $66,231/$12,803=5.17

2015: $81,266/$12,188 =6.67

16. In one or two sentences, briefly explain what the calculations mean. What does the trend show? Hint: This ratio indicates whether or not enough money was generated from operations to cover the dividend payment. ?

17. . Show your calculation for the Operating Cash Flows & Sales Ratio (Cash generated by or (used in) operating activities/Total Revenue or Net Sales) to two decimal places for the most recent three years.

2017: $64,225 /$229,234=0.28

2016: $66,231 /$215,639=0.31

2015: $81,266 /$233,715=0.35

18. In one or two sentences, briefly explain what the calculations mean. What does the trend show? Hint: This ratio indicates how much cash is generated from or (used in) operations for every dollar in sales. This is a way to measure the efficiency of operations in generating cash from sales.

Solutions

Expert Solution

15 Year (Cash generated by or (used in) operating activities/ Dividends
2017 =$ 64,225/$ 13,735           4.68
2016 =$ 66,231/$ 12,803           5.17
2015 =$ 81,266/$ 12,188           6.67
16 As we can see the ratio (Cash generated by or (used in) operating activities/ Dividends) has declined year by year, from 6.67 to 5.17 and 5.17 to 4.68. It indicates that the ratio has been declined - entity may not able to generate operating cash flows to cover dividend in future
17 Year (Cash generated by or (used in) operating activities/ Total Revenue
2017 =$ 64,225/$ 229,234           0.28
2016 =$ 66,231/$ 215,639           0.31
2015 =$ 81,266/$ 233,715           0.35
18 As we can see the ratio (Cash generated by or (used in) operating activities/ Total Revene) has declined year by year, from 0.35 to 0.31 and 0.31 to 0.28. It indicates that the ratio has been declined - entity's ability of generating operating cash flows has been declined if we compare it by dividing the same with Revenue

Related Solutions

1. Prepare a schedule for the calculation of cash generated from operating activities for Kennington Company...
1. Prepare a schedule for the calculation of cash generated from operating activities for Kennington Company for the year ended December 31, 20-2. 2. Prepare a partial statement of cash flows for Kennington Company reporting cash from operating activities under the direct method for the year ended December 31, 20-2. Use a minus to indicate any decreases in cash or cash outflows. Schedule for Calculation of Cash Generated From Operating Activities Kennington Company's condensed income statement for the year ended...
The IRR calculation assumes that cash flows are reinvested at the . If the IRR is...
The IRR calculation assumes that cash flows are reinvested at the . If the IRR is than the project's risk-adjusted cost of capital, then the project should be accepted; however, if the IRR is less than the project's risk-adjusted cost of capital, then the project should be . Because of the IRR reinvestment rate assumption, when projects are evaluated the IRR approach can lead to conflicting results from the NPV method. Two basic conditions can lead to conflicts between NPV...
Which of the following cash flows are not considered in the calculation of the terminal cash-flow...
Which of the following cash flows are not considered in the calculation of the terminal cash-flow for a capital investment proposal? Tax effect on Capital Loss/Gain Book value of the asset cost of issuing new bonds to finance the new project. net working capital. Salvage price of the asset And please explain as well
MUST show Excel calculation for payback Expected Net Cash Flows Time Project A Project B 0...
MUST show Excel calculation for payback Expected Net Cash Flows Time Project A Project B 0 ($375) ($575) 1 ($300) $190 2 ($200) $190 3 ($100) $190 4 $600 $190 5 $600 $190 6 $926 $190 7 ($200) $0 f.   What is the regular payback period for these two projects? Project A Time period 0 1 2 3 4 5 6 7 Cash flow (375) (300) (200) (100) 600 600 926 (200) Cumulative cash flow -$375 -$675 -$875 -$975 -$375 $225...
The calculation that expresses the ratio of net cash inflows to net cash outflows produced by...
The calculation that expresses the ratio of net cash inflows to net cash outflows produced by a financial contract is known as: Select one: a. net present value. b. net profit. c. internal rate of return. d. rate of return.
Cash Flows from Operating Activities—Direct Method The cash flows from operating activities are reported by the...
Cash Flows from Operating Activities—Direct Method The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $509,900 and accounts receivable decreased by $32,600 during the year, what was the amount of cash received from customers? $ b. If income tax expense for the current year was $44,200 and income tax payable decreased by $4,400 during the year, what was the amount...
QUESTION 1 The primary objective of the statement of cash flows is to show cash flows...
QUESTION 1 The primary objective of the statement of cash flows is to show cash flows and what type of cash flow it is. True False QUESTION 2 Major financing and investing activities sometimes do not change cash. True False QUESTION 3 The receipt of dividends from long-term investments in stock is classified as a cash flow from operating activities. True False QUESTION 4 The reporting of noncash activities in a separate schedule is a requirement of the full disclosure...
Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net...
Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.Indirect Method The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows: Dec. 31, 20Y8 Dec. 31, 20Y7 Assets Cash $74,970 $91,680 Accounts receivable (net) 115,190 123,590 Merchandise inventory 164,570 153,180 Prepaid expenses 6,700...
Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net...
Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.Indirect Method List the errors you find in the following statement of cash flows. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year. Shasta Inc....
Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net...
Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.Indirect Method The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows: Dec. 31, 20Y9 Dec. 31, 20Y8 Assets Cash $244,410 $227,360 Accounts receivable (net) 88,540 81,660 Inventories 249,940 241,760 Investments 0 93,660 Land 128,200...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT