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Activity - Cash Flow Analysi

The document contains 5 problems providing financial information for various companies. Problem 1 asks to prepare a statement of cash flows for a company based on cash flow information provided for 2019. Problem 2 asks to prepare a statement of cash flows for Ubbie's Jewelry and Gift Store for 2019 based on additional financial information. Problem 3 asks to calculate cash from operations for Luis Shop for 2019 given cash flows from investing and financing activities and beginning and ending cash balances. Problem 4 asks to calculate Tiffany Corporation's 2019 EBIT given information on free cash flows, investment in operating capital, depreciation expense and taxes. Problem 5 asks essay questions about how depreciation generates cash flows, what a negative free cash flow means, and distinguishing financial

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424 views1 page

Activity - Cash Flow Analysi

The document contains 5 problems providing financial information for various companies. Problem 1 asks to prepare a statement of cash flows for a company based on cash flow information provided for 2019. Problem 2 asks to prepare a statement of cash flows for Ubbie's Jewelry and Gift Store for 2019 based on additional financial information. Problem 3 asks to calculate cash from operations for Luis Shop for 2019 given cash flows from investing and financing activities and beginning and ending cash balances. Problem 4 asks to calculate Tiffany Corporation's 2019 EBIT given information on free cash flows, investment in operating capital, depreciation expense and taxes. Problem 5 asks essay questions about how depreciation generates cash flows, what a negative free cash flow means, and distinguishing financial

Uploaded by

Jessica Aningat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PROBLEM 1: A Company provided the following information during the current year 2019.

Dividend received P 500,000


Dividend Paid 1,000,000
Cash received from customers 9,000,000
Proceeds from issuing share capital 1,500,000
Interest received 200,000
Proceeds from sale of long-term investment 2,000,000
Cash paid to suppliers and employees 6,000,000
Interest paid on long-term debt 400,000
Income taxes paid 300,000
Cash Balance – ending 8,000,000
Cash paid to purchase inventories 7,800,000
Cash received from sale of trading inventories 2,500,000
Cash paid for interest in bank loan 450,000
Cash from issuance of bonds 2,000,000
Cash received for share premium conversion privilege 1,000,000
Stock dividends declared 300,000

Prepare the Statement of Cash Flows. 10 pts

PROBLEM 2: The following information is available for Ubbie’s Jewelry and Gift Store for the
calendar year of 2019:

Net Income P5,000


Depreciation Expense 2,500
Increase in deferred tax liabilities 500
Decrease in cash 3,000
Increase in marketable securities 1,000
Decrease in accounts receivable 2,000
Increase in inventories 9,000
Decrease in accounts payable 5,000
Increase in accrued liabilities 1,000
Increase in property, plant and 14,000
equipment
Increase in short-term notes payable 19,000
Decrease in long-term notes payable 4,000

Prepare the Statement of Cash Flows. 10 pts

PROBLEM 3: Luis Shop had cash flows from investing activities of P 2,567,000 and cash flows
from financing activities of P 3,459,000. The balance of the firm’s cash account was P 950,000
at the beginning of 2019 and P 1,025,000 at the end of the year. Calculate Luis Shop’s cash
from operations for 2019. 5 pts

PROBLEM 4: Tiffany Corporation reported free cash flows for 2019 of P23 million and
investment in operating capital of P13 million. The firm listed P8 million in depreciation expense
and P17 million in taxes on its 2095 income statement. Calculate Tiffany Corporation’s 2019
EBIT. 5 pts

PROBLEM 5: Essay

a. Explain how depreciation generates actual cash flows for the company? 5 pts
b. What does it mean when a firm’s free cash flow is negative? 5 pts
c. Distinguish financial liquidity and financial flexibility. 5 pts

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