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Accounting 211
Monday, March 22nd, 1999
Announcements: none
Lecture notes:
Chapter 27 Homework
Questions
Statement of cash flows shows how a company's operating, investing, and financial activities have affected cash during an accounting period and explains the net increase or decrease in cash during the accounting period.
- Operating activities (wages, taxes)
Investing activities (purchasing of long-term activities)
Financing activities (repayments of loans)
- They need to be disclosed because they represent investing and financing activities. They should be disclosed in a separate schedule as a part of the statement of cash flows.
- They may have sold stuff or borrowed.
- Sold for $13,000, an investing activity
- A and B are both non-cash transactions
Short Exercises
1.
|
1) b |
3) a |
5) c |
|
2) c |
4) d |
6) c |
4.
|
Cash Flows from Financing |
|
Cash from Sales |
190,000 |
|
Cash Payments for purchases |
- 250,000 |
|
Net Cash Flow |
- 60,000 |
|
|
|
Cash Flows from Investing |
|
|
Purchase of Investments |
- 250,000 |
|
Sale of Investments |
190,000 |
|
60,000 |
|
Schedule of Non-Cash |
|
|
Mortgage |
500,000 |
8.
|
Cash Receipts from Sales |
|
Sales |
426,500 |
|
+ Change in AR |
+ 31,200 |
|
457,700 |
|
|
|
Cash Payments for Purchases |
|
|
COGS |
294,200 |
|
+ Change in Inventory |
+ 8,400 |
|
+ Change in AP |
+ 2,200 |
|
304,800 |
Exercises
1.
|
1) c |
5) b |
9) d |
13) b |
|
2) b |
6) d |
10) c |
|
|
3) d |
7) a |
11) a |
|
|
4) a |
8) c |
12) e |
|
*Problem A1: answer is in the packet.
Chapter 28 Homework
Questions
Creditors want to be sure that they will be repaid and investors want to make sure that their investments will pay off.
- Because industries have norms, which means that you can predict what will happen in one company by what happens in another.
- Reports published by the company, SEC reports, business periodicals, and credit and investment advisory services.
- It states relationships between the components of the financial statements.
- Relative--usually operate on 1-2%, sell lots--volume
- No--there are too many factors other than Net Income.
Short Exercises
7.
|
19X1 |
19X2 |
|
Profit Margin |
9.7% |
7.8% |
|
Asset Turnover |
1.32 |
1.31 |
|
Return on Assets |
12.7% |
10.2% |
|
Return on Equity |
41.2% |
33.3% |
Exercises
9.
|
Co. B |
Co. C |
|
Debt to Equity |
.82 |
1.22 |
|
Interest Coverage |
3.96 |
3.42 |
|
Price / Earnings |
12.5 |
9.5 |
|
Dividend Yield |
.1 |
.08 |
11.
|
a) 6,000 |
e) 720 |
i) 4,500 |
m) 2,400 |
|
b) 3,000 |
f) 1,000 |
j) 7,200 |
n) 7,200 |
|
c) 1,772 |
g) 2,000 |
k) 1,500 |
|
|
d) 2,280 |
h) 1,500 |
l) 900 |
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