In: Finance
Using the following information to answer questions (short answer)
Below are the 2017 and 2018 year-end balance sheets for firm AAA:
Assets: 2018 2017
Cash -------- 158,000
Accounts receivable 864,000 700,000
Inventories 2,000,000 1,400,000
Total current assets $3,064,000 $2,270,000
Net fixed assets 6,000,000 5,600,000
Total assets --------- -----------
Liabilities and equity:
Accounts payable $1,400,000 $1,090,000
Notes payable 1,600,000 1,800,000
Total current liabilities $3,000,000 $2,890,000
Long-term debt 2,400,000 2,400,000
Common stock 3,000,000 2,000,000
Retained earnings 664,000 580,000
Total common equity $3,664,000 $2,580,000
Total liabilities and equity ------------- ---------------
Assume sales in 2017 and 2018 were the same. 200,000 = depreciation. 500,000 = net income. No dividend paid.
1. Calculate net cash flow from operation.
2. Calculate net cash flow from investment.
3. Calculate net cash flow from financing.
4. Calculate net changes in cash
Answer 1 | |
Net Cash flow from Operations | |
Net Income | $500,000.00 |
Depreciation | $200,000.00 |
Increase in Accounts Receivable | -$164,000.00 |
Increase in Inventories | -$600,000.00 |
Increase in Accounts Payable | $310,000.00 |
Net Cash flow from Operations | $246,000.00 |
Answer 2 | |
Net Cash flow from Investment | |
Net Fixed assets as of 2017 | $5,600,000.00 |
Less : Net fixed assets as of 2018 | $6,000,000.00 |
Less : Depreciation | $200,000.00 |
Net Cash flow from Investment | -$600,000.00 |
Answer 3 | |
Net Cash flow from Financing | |
Decrease in Notes Payable | -$200,000.00 |
Issue of Common Stock | $584,000.00 |
Net Cash flow from Financing | $384,000.00 |
Answer 4 | |
Net changes in Cash | |
Net Cash flow from Operations | $246,000.00 |
Net Cash flow from Investment | -$600,000.00 |
Net Cash flow from Financing | $384,000.00 |
Net changes in Cash | $30,000.00 |
Working | |
Calculation of stock dividend paid | |
Retained earnings as of 2017 | $580,000.00 |
Add : Net Income for 2018 | $500,000.00 |
Less : Retained Earnings as of 2018 | $664,000.00 |
Stock dividend paid | $416,000.00 |
Calculation of Issue of common stock for cash | |
Total issue of Common stock | $1,000,000.00 |
Less : Stock dividend paid | $416,000.00 |
Issue of Common stock for cash | $584,000.00 |