– Statement of Cash Flows Nick Ltd is the founder and owner of a health club....

– Statement of Cash Flows

Nick Ltd is the founder and owner of a health club. His club operates in Toronto, Ontario and has been in the same location since 2014. The health club offers a variety of services to its members (group classes, personal training etc.). The club also will put on special “fitness” events. The fitness facility has everything - free weights, squat racks, cardio machines (treadmills, bikes and ellipticals), yoga mats, stability balls, pull-up bars, etc. Since Nick charges a premium for the membership to the club, he is constantly looking at updating and expanding the fitness equipment. This past year he purchased a number of weighted battle ropes, new rowing machines a number of additional kettle bells. You have been presented with the following summarized information from his statement of cash flows for the year ended December 31, 2017:

Cash from operations	46,250
Cash from investing activities	(26,250)
Cash from financing activities	24,300

What was the net change in cash for the period?

Explain each type of cash flow and provide an example of the types of transactions that make up the operating, investing and financing section of Nick’s cash flow statement.

Examine the cash flow pattern for Nick Ltd. What does this pattern say about the situation the company is in?

Expert Solution

Net change in cash for the period = 46,250 - 26,250 + 24,300 = 44,300 positive

Cash from operations/Operating cash flow

Cash generated/used from regular daily operations would fall in this category. For Nick's business it would be service revenue from a variety of services to its members (group classes, personal training etc.) and from special “fitness” events.

Cash from investing activities

Cash generated/used in long term investments/fixed assets purchases would fall in this category. For Nick's business it would be purchases of weighted battle ropes, new rowing machines a number of additional kettle bells etc.

Cash from financing activities

Cash inflow from loans mainly falls in this category. For Nick's business it would be borrowings.

Nick has sufficient cash flow from operating activities to meet his investing needs, there is no need to borrow from the market which is depicted in financing activity inflow. Rather he should invest his operating surplus to generate more revenue.

ekkarill92 answered 1 year ago

Question 3 – Statement of Cash Flows Nick Ltd is the founder and owner of a...

Question 3 – Statement of Cash Flows Nick Ltd is the founder and owner of a health club. His club operates in Toronto, Ontario and has been in the same location since 2014. The health club offers a variety of services to its members (group classes, personal training etc.). The club also will put on special “fitness” events. The fitness facility has everything - free weights, squat racks, cardio machines (treadmills, bikes and ellipticals), yoga mats, stability balls, pull-up bars,...

Statement of Cash Flows The Statement of Cash Flows (also referred to as the cash flow...

Statement of Cash Flows The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three key financial statements that report the cash generated and spent during a specific period of time (e.g., a month, quarter, or year). The statement of cash flows acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business. Three Sections of the Statement of Cash Flows: Operating...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $ 25,107 Net sales 17,793 Total revenue 42,900 Cost of goods sold $ 14,152 Depreciation expense—Office equipment 330 Depreciation expense—Computer equipment 1,240 Wages expense 2,450 Insurance expense 525 Rent expense 2,275 Computer supplies expense 1,235 Advertising expense 520 Mileage expense 270 Repairs expense—Computer...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $ 25,207 Net sales 18,593 Total revenue 43,800 Cost of goods sold $ 14,552 Depreciation expense—Office equipment 360 Depreciation expense—Computer equipment 1,220 Wages expense 2,650 Insurance expense 545 Rent expense 2,375 Computer supplies expense 1,275 Advertising expense 510 Mileage expense 310 Repairs expense—Computer...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2018 Computer services revenue $ 24,507 Net sales 18,193 Total revenue 42,700 Cost of goods sold $ 14,252 Depreciation expense—Office equipment 380 Depreciation expense—Computer equipment 1,180 Wages expense 2,950 Insurance expense 495 Rent expense 2,075 Computer supplies expense 1,285 Advertising expense 600 Mileage expense 250 Repairs expense—Computer 910...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2019 Computer services revenue $ 25,307 Net sales 18,693 Total revenue 44,000 Cost of goods sold $ 14,052 Depreciation expense—Office equip. 400 Depreciation expense—Computer equip. 1,250 Wages expense 3,250 Insurance expense 555 Rent expense 2,475 Computer supplies expense 1,305 Advertising expense 600 Mileage expense 320 Repairs expense—Computer 960...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $ 25,007 Net sales 17,893 Total revenue 42,900 Cost of goods sold $ 14,652 Depreciation expense—Office equipment 370 Depreciation expense—Computer equipment 1,250 Wages expense 2,950 Insurance expense 475 Rent expense 1,575 Computer supplies expense 1,285 Advertising expense 580 Mileage expense 260 Repairs expense—Computer 860...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $ 24,307 Net sales 18,393 Total revenue 42,700 Cost of goods sold $ 14,652 Depreciation expense—Office equipment 400 Depreciation expense—Computer equipment 1,210 Wages expense 3,050 Insurance expense 525 Rent expense 2,375 Computer supplies expense 1,275 Advertising expense 510 Mileage expense 280 Repairs expense—Computer...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $ 25,207 Net sales 17,993 Total revenue 43,200 Cost of goods sold $ 14,852 Depreciation expense—Office equipment 310 Depreciation expense—Computer equipment 1,250 Wages expense 2,850 Insurance expense 525 Rent expense 1,975 Computer supplies expense 1,285 Advertising expense 540 Mileage expense 310 Repairs expense—Computer 860...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2018 Computer services revenue $ 24,407 Net sales 18,193 Total revenue 42,600 Cost of goods sold $ 14,452 Depreciation expense—Office equipment 400 Depreciation expense—Computer equipment 1,240 Wages expense 2,550 Insurance expense 465 Rent expense 1,775 Computer supplies expense 1,265 Advertising expense 540 Mileage expense 230 Repairs expense—Computer...

Question

– Statement of Cash Flows Nick Ltd is the founder and owner of a health club....

Solutions

Expert Solution

Related Solutions