Statement Of Cash Flow
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- Words: 882
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2
9
th
NINT H
EDITI ON
Foundations of Financial Management
CHAPTER
TWO
Block Hirt
Review of Accounting
Irwin/McGraw-Hill Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-1
NINT H
th EDITI ON
Table 2-1 KRAMER CORPORATION
Income Statement For the Year Ended December 31, 1999
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
Block Hirt
Sales . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . Gross Profits . . . . . . . . . Selling and administrative expense . . . . Depreciation expense . . . . . . . . . . Operating profit (EBIT)* . . . . Interest expense . . . . . . . . . . . . Earnings before taxes (EBT) . . Taxes . . . . . . . . . . . . . . . . . Earnings after taxes (EAT) . . . Preferred stock dividends . . . . . . . . Earnings available to common stockholders. Shares outstanding . . . . . . . . . . . Earnings per share . . . . . . . . . . .
$2,000,000 1,500,000 500,000 270,000 50,000 180,000 20,000 160,000 49,500 110,500 10,500 $ 100,000 100,000 $1.00
*Earnings before interest and taxes.
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-7
NINT H
th EDITI ON
Table 2-6a KRAMER CORPORATION Comparative Balance Sheets Year-End 1998
Year-End 1999
Assets Current assets: Cash . . . . . . Marketable securities . Accounts receivable (net) Inventory . . . . Prepaid expenses . . . Total current assets .
Block Hirt
. . . . . .
. . . . . .
Investments (long term) . . . Plant and equipment . . . . Less: Accumulated depreciation Net plant and equipment . . . Total assets . . . . . . .
Irwin/McGraw-Hill
. . . . . .
. . . . . .
$
30,000 10,000 170,000 160,000 30,000 400,000
. . . . .
. . . . .
20,000 1,000,000 550,000 450,000 $ 870,000
$
40,000 10,000 200,000 180,000 20,000 450,000
50,000 1,100,000 600,000 500,000 $ 1 ,000,000
©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-7
NINT H
th EDITI ON
Table 2-6b
KRAMER CORPORATION Comparative Balance Sheets Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable . . . . . . Notes payable . . . . . . . Accrued expenses . . . . . . Total current liabilities . Long-term liabilities: Bonds payable, 1998 . . . . . . Total liabilities . . . Stockholders’ equity: Preferred stock, $100 par value . . Common stock, $1 par value . . . Captial paid in excess of par . . . Retained earnings . . . . . . Total stockholders’ equity
Block Hirt
Year-End 1998
Year-End 1999
. . . .
. . . .
$ 45,000 100,000 35,000 180,000
. .
. .
40,000 220,000
90,000 300,000
. . . . .
. . . . .
50,000 100,000 250,000 250,000 650,000
50,000 100,000 250,000 300,000 700,000
Total liabilities and stockholders’ equity .
.
Irwin/McGraw-Hill
$
80,000 100,000 30,000 210,000
$870,000 $ 1,000,000 ©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-9
NINT H
th EDITI ON
Table 2-10a
KRAMER CORPORATION Statement of Cash Flows For the Year Ending December 31, 1999
Cash flows from operating activities: Net income (earnings after taxes) . Adjustments to determine cash flow from operating activities: Add back depreciation . . . Increase in accounts receivable . Increase in inventory . . . . Decrease in prepaid expenses . Increase in accounts payable . . Decrease in accrued expenses. . Total adjustments . . .
Block Hirt
. . . . . . . . $ 110,500
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . .
. . 50,000 (30,000) . (20,000) 10,000 35,000 (5,000) . . 40,000
Net cash flows from operating activities . . . . . . . $ 150,500
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
T 2-9
NINT H
th EDITI
Foundations of Financial Management
ON
Table 2-10b Cash flows from investing activities: Increase in investments (long-term securities) . . . (30,000) Increase in plant and equipment . . . . . . . . . (100,000) Net cash flows from investing activities . . . . . . ($130,000) Cash flows from financing activities: Increase in bonds payable . . . . . . Preferred stock dividends paid . . . . Common stock dividends paid . . . . Net cash flows from financing activities
. . . .
. . . .
. . . 50,000 . . . (10,500) . . . (50,000) . ($10,500)
Net increase (decrease) in cash flows . . . . . . . . $10,000
Block Hirt
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
th
NINT H
EDITI ON
Foundations of Financial Management
CHAPTER
TWO
Block Hirt
Review of Accounting
Irwin/McGraw-Hill Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-1
NINT H
th EDITI ON
Table 2-1 KRAMER CORPORATION
Income Statement For the Year Ended December 31, 1999
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
Block Hirt
Sales . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . Gross Profits . . . . . . . . . Selling and administrative expense . . . . Depreciation expense . . . . . . . . . . Operating profit (EBIT)* . . . . Interest expense . . . . . . . . . . . . Earnings before taxes (EBT) . . Taxes . . . . . . . . . . . . . . . . . Earnings after taxes (EAT) . . . Preferred stock dividends . . . . . . . . Earnings available to common stockholders. Shares outstanding . . . . . . . . . . . Earnings per share . . . . . . . . . . .
$2,000,000 1,500,000 500,000 270,000 50,000 180,000 20,000 160,000 49,500 110,500 10,500 $ 100,000 100,000 $1.00
*Earnings before interest and taxes.
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-7
NINT H
th EDITI ON
Table 2-6a KRAMER CORPORATION Comparative Balance Sheets Year-End 1998
Year-End 1999
Assets Current assets: Cash . . . . . . Marketable securities . Accounts receivable (net) Inventory . . . . Prepaid expenses . . . Total current assets .
Block Hirt
. . . . . .
. . . . . .
Investments (long term) . . . Plant and equipment . . . . Less: Accumulated depreciation Net plant and equipment . . . Total assets . . . . . . .
Irwin/McGraw-Hill
. . . . . .
. . . . . .
$
30,000 10,000 170,000 160,000 30,000 400,000
. . . . .
. . . . .
20,000 1,000,000 550,000 450,000 $ 870,000
$
40,000 10,000 200,000 180,000 20,000 450,000
50,000 1,100,000 600,000 500,000 $ 1 ,000,000
©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-7
NINT H
th EDITI ON
Table 2-6b
KRAMER CORPORATION Comparative Balance Sheets Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable . . . . . . Notes payable . . . . . . . Accrued expenses . . . . . . Total current liabilities . Long-term liabilities: Bonds payable, 1998 . . . . . . Total liabilities . . . Stockholders’ equity: Preferred stock, $100 par value . . Common stock, $1 par value . . . Captial paid in excess of par . . . Retained earnings . . . . . . Total stockholders’ equity
Block Hirt
Year-End 1998
Year-End 1999
. . . .
. . . .
$ 45,000 100,000 35,000 180,000
. .
. .
40,000 220,000
90,000 300,000
. . . . .
. . . . .
50,000 100,000 250,000 250,000 650,000
50,000 100,000 250,000 300,000 700,000
Total liabilities and stockholders’ equity .
.
Irwin/McGraw-Hill
$
80,000 100,000 30,000 210,000
$870,000 $ 1,000,000 ©The McGraw-Hill Companies, Inc.
9
Foundations of Financial Management
T 2-9
NINT H
th EDITI ON
Table 2-10a
KRAMER CORPORATION Statement of Cash Flows For the Year Ending December 31, 1999
Cash flows from operating activities: Net income (earnings after taxes) . Adjustments to determine cash flow from operating activities: Add back depreciation . . . Increase in accounts receivable . Increase in inventory . . . . Decrease in prepaid expenses . Increase in accounts payable . . Decrease in accrued expenses. . Total adjustments . . .
Block Hirt
. . . . . . . . $ 110,500
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . .
. . 50,000 (30,000) . (20,000) 10,000 35,000 (5,000) . . 40,000
Net cash flows from operating activities . . . . . . . $ 150,500
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
9
T 2-9
NINT H
th EDITI
Foundations of Financial Management
ON
Table 2-10b Cash flows from investing activities: Increase in investments (long-term securities) . . . (30,000) Increase in plant and equipment . . . . . . . . . (100,000) Net cash flows from investing activities . . . . . . ($130,000) Cash flows from financing activities: Increase in bonds payable . . . . . . Preferred stock dividends paid . . . . Common stock dividends paid . . . . Net cash flows from financing activities
. . . .
. . . .
. . . 50,000 . . . (10,500) . . . (50,000) . ($10,500)
Net increase (decrease) in cash flows . . . . . . . . $10,000
Block Hirt
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc.
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