142. Lowes and Home Depot report the following information in their 2010 annual financial
statements ($ in millions):
Calculate Lowe’s and Home Depot’s cash return on assets, cash flow to sales ratio, and asset
turnover ratio for 2010. Which company has the better cash flow to sales ratio and which
company has the better asset turnover ratio?
143. The balance sheet of Integrated Systems reports total assets of $890,000 and $950,000 at
the beginning and end of the year, respectively. Sales revenues are $1.6 million, net income is
$185,000, and net cash flows from operating activities are $155,000. Calculate the cash return
on assets, cash flow to sales, and asset turnover for Integrated Systems.
144. The balance sheet of The Computer Doctor reports total assets of $160,000 and $220,000
at the beginning and end of the year, respectively. The cash return on assets for the year is
10%. Calculate The Computer Doctor’s net cash flows from operating activities for the year.
145. Explain the difference in the calculation of return on assets and cash return on assets.
How can cash-based ratios supplement the analysis of ratios based on income statement and
balance sheet information?
146. Discount Computers’ accounts receivable increases during the year by $3 million. What
is the amount of cash received from customers during the reporting period if its sales are $47
million?
147. Laser Solutions’ inventory decreases during the year by $8 million and its accounts
payable to suppliers increases by $6 million during the same period. What is the amount of
cash paid to suppliers of merchandise during the reporting period if its cost of goods sold is
$81 million?
148. Freedom Wireless reports operating expenses of $255,000. Operating expenses include
both rent expense and salaries expense. Prepaid rent decreases during the year by $10,000 and
salaries payable increases by $25,000. What is the cash paid for operating expenses during the
year?
149. Wilson Electric reports income tax expense of $150,000. Income tax payable at the
beginning and end of the year are $20,000 and $25,000, respectively. What is the cash paid
for income taxes during the year?
150. Portions of the financial statements for Horizon Telecom are provided below.
Prepare the operating activities section of the statement of cash flows for Horizon Telecom
using the direct method.
151. For each of the following ten transactions, indicate by letter whether the cash effect of
each transaction is reported in a statement of cash flows as an operating (O), investing (I),
financing (F), or noncash (NC) activity. Also, indicate whether the transaction is a cash inflow
(CI), cash outflow (CO), or no effect on cash (NE). The first answer is provided as an
example.
1.#