Business Analysis for Investment (FNCE2003) Module 4R

Java Python Business Analysis for Investment (FNCE2003)

Module 4

Understanding Balance Sheet and Cash Flow Statements

Question 1:

Assuming U.S. GAAP, use the following data to answer the questions:

Net Income	$45
Depreciation	75
Taxes paid	25
Interest paid	5
Dividends paid	10
Cash received from sale of company building	40
Issuance of preferred stock	35
Repurchase of common stock	30
Purchase of machinery	20
Issuance of bonds	50
Debt retired through issuance of common stock	45
Paid off long-term bank borrowing	15
Profit on sale of building	20

a. What is the cash flow from operation?

b. What is the cash flow from investment activities?

C. What is the cash flow from financing activities?

Question 2:

Below is the income statement data of Jones Inc.

Sales	$1500
Increase in inventory	100
Depreciation	150
Increase in accounts receivable	50
Decrease in accounts payable	70
After tax profit margin	25% Business Analysis for Investment (FNCE2003) Module 4R
Gain on sale of machinery	$30

Based on the above information, what is the Cash flow from operation for Jones Inc.?

Question 3:

Adelaide Brighton Company recorded the following in Year 2015:

Proceeds from issuance of long-term debt $300,000

Purchase of equipment $200,000

Payment for inventory $50,000

Loss on sale of equipment $70,000

Stock repurchase $9,000

Proceeds from sale of equipment $220,000

Equity in earnings of affiliate $10,000

On the Year 2015 statement of cash flows, what the company would report as net cash flow from investing activities?

Question 4:

Green Flag., a retailer of floral products, reported cost of goods sold for the year of $85 million. Total assets increased by $35 million, but inventory declined by $7 million. Total liabilities increased by $40 million, and accounts payable increased by $8 million. What is the amount of cash paid by the company to its suppliers?

Question 5:

Following are the information gathered from a company’s 2010 financial statements (in $ millions):

Year ended 31 December	2009	2010
Net sales	265.4	277.4
Cost of goods sold	168.3	187.9
Accounts receivable	77.8	68.8
Inventory	37.4	47.8
Accounts payable	28.3	32.9
Property and equipment	185.5	195.6

Based only on the information above, what would the company’s 2010 statement of cash flows in the direct format include amounts (in $ millions) for cash received from customers and cash paid to suppliers?

Question 6:

Blue Bayou, an advertising company, reported revenues of $80 million, total expenses of $35 million, cash and marketable securities $2million and net income of $15 million in the most recent year. If accounts receivable decreased by $22 million and accounts payable increase by 8 million, how much cash did the company receive from customers?

Question 7:

Blue Beverages Plc., a manufacturer of tropical drinks, reported cost of goods sold for the year of $120 million. Total assets increased by $55 million, accounts receivable increase by $120 million but inventory declined by $25 million. Total liabilities increased by $45 million, but accounts payable decreased by $5 million