Question

This was the complete question we were given. I have no idea what I am supposed to do with this. Do a Sources and Uses and then Analyze. Please explain the steps to do a Sources and Uses. Thank you!!

2011 55 30 Table 5-2 Assets Cash Marketable Securities Accounts Receivable Inventories Total Current Assets Carter Chemical Company: Balance Sheet as of December 31 (Millions of Dollars) 2012 2011 Liabilities and Equity 50 Accounts Payable 25 Notes Payable 350 315 Accrued Wages 300 215 Accrued Income Taxes 700 610 Total Current Liabilities 2012 60 100 10 60 10 130 120 300 220 500 520 Gross Fixed Assets Gross Accumulated Depreciation Net Fixed Assets 1,800 500 1,300 1,470 400 1,070 300 60 800 580 First Mortgage Bonds Debentures Total Long-Term Debt Stockholders Equity Common Stock (50,000,000 shares, $1 par) Paid-In Capital Retained Earnings Total Stockholders' Equity (Common Net Worth) Total Liabilities and Equity 50 50 100 750 100 730 880 1,680 900 2,000 Total Assets 2,000 1,680

Answer 1

A sources and uses of funds statement is a summary of a firm’s changes in financial position from one period to another. It is also called a flow of funds statement or a statement of changes in financial position.

Technically, you have to prepare a CASH FLOW STATEMENT and present its analysis, which can be done with the help of the key points mentioned below.

Generally, the statement consists of two sections: the source (where the money has come from) and the application (where the money has gone).

The sources of funds originate from:

• A decrease in liabilities or an increase in assets
• Net income after tax
• The disposal or revaluation of fixed assets
• Proceeds of loans obtained
• Proceeds of shares that were issued
• Repayments received on loans previously granted by the company
• Any increase in net working capital

The application of funds includes:

• Losses to be met by the company
• The purchase of fixed assets/investments
• The full or partial payment of loans
• Granting of loans
• Liability for taxes
• Dividends paid or proposed
• Any decrease in net working capital

FORMAT OF CASH FLOW STATEMENT: (Its just a sample, for descriptive format, refer your course book.)

AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2014 2015 8,658 $ 14,557 $ 2016 15,890 (241) 596 2,371 6,281 2,119 8,116 2,975 155 160 4,746 1,497 129 59 (316) (6) (20) (246) (829) (119) (2,187) (1,755) 4,294 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income (loss) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs Stock-based compensation Other operating expense, net Other expense (income), net Deferred income taxes Excess tax benefits from stock-based compensation Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Additions to unearned revenue Amortization of previously unearned revenue Net cash provided by (used in operating activities INVESTING ACTIVITIES: Purchases of property and equipment, including internal-use software and website development, net Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities Net cash provided by used in investing activities FINANCING ACTIVITIES: Excess tax benefits from stock-based compensation Proceeds from long-term debt and other Repayments of long-term debt and other Principal repayments of capital lease obligations Principal repayments of finance lease obligations Net cash provided by (used in financing activities Foreign currency effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, END OF PERIOD (1,193) (1,039) 1,759 706 4,433 (3.692) 6,842 913 (1,426) (3,367) 5,030 1,724 11,931 (9.976 16,443 7,401 (6,109) 11,920 (4,893) (979) 3,349 (2.542 (5,065) (4,589) (795) 3,025 (4.091) (6,450) (6,737) (116) 4,733 (7,756 (9,876) 119 6,359 (513) (1,285) (135) 4.432 (310) 5,899 14,557 $ 353 (1,652) (2,462) (121 (3,763) (374) 1,333 15,890 $ 829 621 (354) (3,860) (147) (2,911) (212) 3,444 19,334