Which one of the following is a source of cash?
increase in accounts payable
decrease in notes payable
increase in accounts receivable
increase in inventory
decrease in common stock
Which of the following statements concerning the cash flow production cycle is true?
A company’s operations and finances are independent of each other.
The profits reported in a given time period equal the cash flows generated.
A profitable company will always have sufficient cash to meet its obligations.
The movement of cash to inventory, to accounts receivable, and back to cash is known as the firm’s working capital cycle.
Financial statements have nothing to do with reality.
The most popular yardstick of financial performance among lenders and creditors is the
return on assets.
earnings yield.
times-burden-covered ratio.
profit margin.
return on equity.
None of the options are correct.
All else equal, increasing the assumed payables period in a financial forecast will decrease external funding required. True or false
The most common approach to developing pro forma financial statements is called the
Group of answer choices
percent-of-sales method.
market-oriented approach.
cash budget method.
seasonality approach.
financial planning method.
None of the options are correct.
Link, Inc.
Selected financial data ($ thousands)
2017
Income statement and related items
Sales $ 109,232
Cost of goods sold 72,168
Net income 16,389
Cash flow from operations 20,773
Balance sheet items
Cash $ 17,459
Marketable securities 9,935
Accounts receivable 11,173
Inventory 6,987
Total current assets 47,589
Accounts payable 8,658
Total current liabilities 28,690
Please refer to the financial data for Link, Inc. above. Link’s collection period for 2017 is ( round to nearest whole number)
a. The length of the cash conversion cycle for a firm with $3 million in inventory, $1.5 million in accounts payable, a collection period of 40 days, and an annual cost of goods sold of $18 million is days? 70.4, 51.3, 30.4
b. Is this firm expected to have a cash flow problem ? Y or N
Which restaurant do you think is expected to have a higher inventory turnover, an upscale dining or a casual dinning? Explain
Which firm do you think is expected to have a higher profit margin, a luxury hotel or an economy hotel? Explain
You are estimating your company’s external financing needs for the next year. Your first-pass pro forma financial statements showed a large financing deficit for next year. Explain what step you can take to reduce the financing deficit for next year.
Why is it necessary to use past financial information in constructing proforma statements?
Accounts payable 401 437
Air traffic liability 1,119 1,035
Accrued salaries, wages and benefits 376 313
Other accrued liabilities 295 298
Operating Lease, Liability, Current 128 133
Current maturities of long-term debt and finance lease obligations 344 309
Total current liabilities 2,663 2,525
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS 1,990 1,361
Operating Lease, Liability, Noncurrent 690 798
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes 1,251 1,112
Frequent Flier Liability, non-current 481 447
Other 44 31
Total deferred taxes and other liabilities 1,776 1,590
COMMITMENTS AND CONTINGENCIES 7,119 6,274
STOCKHOLDERS’ EQUITY
Common stock 4 4
Additional paid-in capital 2,253 2,203
Retained earnings 4,322 3,753
a. Frequent Flier Liability, Non-current represents (use/source) of cash
b. The amount of the use/source of cash is $
Oscar’s Incredible Eatery ($ thousands)
Select Income Statement items for the year ending Dec. 31, 2017
Net sales 17,299
Cost of goods sold 12,753
Earnings after tax 1,956
Dividends 399
Oscar’s Incredible Eatery ($ thousands)
Selected Balance Sheet items as of Dec. 31, 2017
Cash 194 Accounts payable 2,174
Accounts receivable 827 Long-term debt 3,932
Inventory 2,457 Common stock 8,164
Retained earnings 1,252
All of Oscar’s costs and current asset accounts vary directly with sales. Sales are projected to increase by 6.0 percent. The pro forma accounts receivable balance for next year is $?(round to the nearest whole number)
To estimate Missed Places, Inc.’s (MP) external financing needs, the CFO needs to figure out how much equity her firm will have at the end of next year. At the end of the most recent fiscal year, MP’s retained earnings were $179,884. The Controller has estimated that over the next year, gross profits will be $370,087 net income will total $33,022, and MP will pay $8,868 in dividends. Estimated retained earnings at the end of next year is $
Which of the following statements concerning the cash flow production cycle is true?
Group of answer choices
A company’s operations and finances are independent of each other.
The profits reported in a given time period equal the cash flows generated.
A profitable company will always have sufficient cash to meet its obligations.
The movement of cash to inventory, to accounts receivable, and back to cash is known as the firm’s working capital cycle.
Financial statements have nothing to do with reality.