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Operating Investing Financing Noncash
Activity Activity Activity Transaction Increase Decrease No Effect
Alternate Problems
P6. Classification of Cash Flow Transactions
*Cash equivalent
Transaction
Cash Flow Classification Effect on Cash Flows
15-18
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2.
a.
Reed Corporation's large increase in cash from 2013 to 2014 was caused by large net
cash flows from operations of $548,000. The primary reasons for the increase, in addition
to net income of $239,200, were:
Reduction of accounts receivable between years ($40,000)
P7. Statement of Cash Flows: Indirect Method
Reed Corporation
For the Year Ended June 30, 2014
Statement of Cash Flows
Cash flows from operating activities:
15-19
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
*Rounded
P7. Statement of Cash Flows: Indirect Method (Concluded)
Net Cash Flows from Operating Activities
Net Income
Cash Flow Yield =
15-20
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
P8. Statement of Cash Flows: Indirect Method
For the Year Ended December 31, 2014
Shah Fabrics, Inc.
Cash flows from operating activities:
Statement of Cash Flows
15-21
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
P8. Statement of Cash Flows: Indirect Method (Concluded)
Although net income of $112,000 generated only $93,600 of cash flows from operating
$204,000. Shah Fabrics has increased its cash balance through these financing activi-
*Rounded
invest and improve its performance.
crease cash by $268,800. Net cash flows (or increases) from financing activities were
15-22
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
P9. Statement of Cash Flows: Indirect Method
Kohl Ceramics, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities:
15-23
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
=
P9. Statement of Cash Flows: Indirect Method (Concluded)
grow so rapidly? Are the company's suppliers requiring faster payment? The focus
Net Income
Cash Flow Yield
and issued bonds. Overall, the situation warrants investigation. Why did inventory
should be on increasing cash flows from operating activities and, secondarily, on a
Net Cash Flows from Operating Activities
positive free cash flow.
to more than offset the increase in cash through investing and financing activities.
15-24
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
Cash flows from operating activities:
P10. Statement of Cash Flows: Indirect Method
William Corporation
Statement of Cash Flows
For the Year Ended December 31, 2014
15-25
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
3.
factors.
improve its profitability in 2015, cash flows do not currently seem to be a problem.
Net Income
amount of net capital expenditures for the year. Assuming that the company can
=Net Cash Flows from Operating Activities
P10. Statement of Cash Flows: Indirect Method (Concluded)
Cash Flow Yield
*Rounded
$114,800. The most important causes of this difference were the decrease in accounts
William Corporation had net income of only $11,000, but a net increase in cash of
15-26
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
