Exam 3: Income Flows versus Cash Flows: Understanding the Statement of Cash Flows

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Normally,cash flows from operations will peak during which phase of the product life cycle?

The receipt of dividends from an investee would be classified as ____________________ activities in the statement of cash flows.

J.Jill is a women's clothing retailer.The company started as a mail order company and has expanded into mall department stores.The company now receives approximately half of its revenues from mail order and half from retail outlets.Over the time period 2010 to 2012,sales increased approximately 25%. Discuss the relationship between net income,working capital from operations,and cash flow from operations,and between cash flows from operating,investing,and financing activities over the three-year period. $\text { CASH FLOW STATERENT \{in thousands }$ Cash from operations 12/25/2012 12/27/2011 Net income 8,706 7,025 18,434 Depreciation \& amortization 18,663 16,131 12,672 Net increase (decrease) in assets \& liab. 6,696 26,659 10,623 Other adjustments, net 1,396 924 3,996 Net cash provided by (used in) operations Cash from investments (Increase) decrease in property \& plant -28,784 -34,265 -34,734 Other cash inflow (outflow) -35,434 -1,143 -2,454 Net cash provided by (used in) investing - - Cash from financing Issuances (purchases) of equity shares 3,142 870 7,800 ncrease (decrease) in borrowings -1,706 -1,648 -1,755 Net cash provided by (used in) financing - - 14,582 Net change cash \& cash equivalents -27,321 14,553 30,152 Cash and cash equivalents at start of year 59,287 44,734 30,152 Cash and cash equivalents at year end 31,966 59,287 44,734

Adophus,Inc.'s 2010 income statement reported total revenues of $850,000 and total expenses (including $40,000 depreciation)of $720,000.The 2010 balance sheet reported the following: accounts receivable beginning balance of $50,000 and ending balance of $40,000; accounts payable beginning balance of $22,000 and ending balance of $28,000.Therefore,based only on this information and using the indirect method,the 2010 net cash inflow from operating activities was: 

____________________ ___________________ equals current assets minus current liabilities

Which of the following is not one of the reasons why net income differs from cash flows from operations under the indirect method of calculating cash flows?

The financial statements for Warren Company show the following: Cost of goods sold $725,000 Beginning Balance Ending Balance Merchandise Irventory \ 45,000 \ 56,000 Accounts Receivable 53,000 50,000 Accounts Payable 37,000 42,000 Based on this information,cash paid for merchandise was:

A company in the growth phase of its product life cycle will normally have which of the following patterns of cash flows?

When preparing the statement of cash flows using the indirect method,an increase in accounts payable would appear as:

The issuance of debt would be classified as a(n)____________________ activity in the statement of cash flows.

Which of the following companies would you expect to report significant amounts of cash provided by financing activities?

Under the indirect method of preparing the statement of cash flows,add backs to net income include all of the following except:

Outback Corp.recorded sales of $1,300,000 in 2010,in addition the company's accounts receivable balance grew from $120,000 at the beginning of 2010 to $165,000 at the end of 2010.How much cash did Outback collect from customers in 2010?

The acquisition of new investments would be classified as ____________________ activities in the statement of cash flows.

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be:

Which of the following is an adjustment that would need to be made to net income when calculating cash flows from operations under the indirect method?

When preparing the statement of cash flows using the indirect method,an increase in inventories would appear as:

Bankers Company reported net income of $40,000,which included depreciation expense and depletion expense of $21,000 and $18,000,respectively.The following changes also occurred during 2010: Irventory \ 10,000 decrease Accourts payable 5,000 decrease Notes payable (leng-term) 15,000 decrease Income taxes payable 7,000 increase Accourts receivable 10,000 increase Required: Calculate cash flows from operating activities. 

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.