1. Compute the free cash flow for the year 2014.
2. Explain why cas declined so sharply during the year 2014.
Homework Answers
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||
| a | Net Income | $63,000 | ||||
| b | Gain on sale of Equipment | -$6,000 | ||||
| c | Depreciation for the year | $35,000 | (1650000-130000) | |||
| (Increase)/Decrease in current assets | ||||||
| d | Increase in Accounts Receivable | -$70,000 | (250000-180000) | |||
| e | Increase in Inventory | -$48,000 | (318000-270000) | |||
| f | Decrease in Prepaid expenses | $9,000 | (16000-7000) | |||
| Increase/(Decrease) in current liabilities | ||||||
| g | Increase in Accounts Payable | $50,000 | (310000-260000) | |||
| h | Decrease in accrued Liabilities | -$8,000 | (50000-42000) | |||
| i | Increase in Income Taxes Payable | $4,000 | (84000-80000) | |||
| j=a+b+c+d+e+f+g+h+i | NET CASH PROVIDED BY OPERATING ACTIVITIES | $29,000 | ||||
| CASH FLOW FROM INVESTING ACTIVITIES | ||||||
| Cash Received from Sale of Equipment | $26,000 | |||||
| Investment in plant and Equipment | -$140,000 | (620000-(500000-30000)-10000) | ||||
| k | NET CASH FLOW PROVIDED BY INVESTING ACTIVITIES | -$114,000 | ||||
| CASH FLOW FROM FINANCING ACTIVITIES | ||||||
| Loan to Harker Company | ($40,000) | |||||
| Increase in Bonds Payable | $90,000 | (190000-100000) | ||||
| Increase in Common Stock | $60,000 | (335000-275000) | ||||
| *Less: Total dividends paid | -$33,000 | |||||
| l | NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES | $77,000 | ||||
| m=j+k+l | Net CASH FLOW | -$8,000 | ||||
| * Calculation of dividends paid | ||||||
| Retained Earning in the beginning of year | $90,000 | |||||
| Add: Net Income | $63,000 | |||||
| Less: Dividend Paid | $33,000 | (90000+63000-120000) | ||||
| Retained Earning at the end of year | $120,000 | |||||
| 1 | Cash Flow in 2014 | -$8,000 | ||||
| 2 | Cash Declined because of investment in Plant and Equipment | |||||
Add Answer to:
1. Compute the free cash flow for the year 2014.
2. Explain why cas declined so...
1. Use the indirect method and compute the net cash provided by operating activities for the...
1.
Use
the indirect method and compute the net cash provided by operating
activities for the year 2014.
2. prepare a statement of cash flows for the year
2014.
3. compute the the free cash flow for the year 2014.
4. explain why cas declined so sharply during the year
2014.
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