RecapofLastClass(StatementofCashFlows)
Lecture9
Spring2009
StatementofCashFlows
andCashFlowAnalysis
1
TodaysClass
CashFlowAnalysis
QuestionsaboutExam
2
PurposeoftheStatementofCashFlows
Toreportabouthowtheentirefirmsoperating,investing,and
financingactivitieshaveaffecteditscashbalancesduringthe
periodcoveredbythestatement.
Inthiscontext,Cashisdefinedascashbalancesplus
marketablesecuritieswithoriginalmaturitiesofthreemonths
orless.
Thecashflowstatementshoulddisplayallofthecashinflows
withineachofthethreecategories
1. Operations
2. Investing
3. Financing
3
StatementofCashFlows
PurposeofStatementofCashFlowsistoreconcilewhyNetIncomeisdifferent
thanchangeinCashbalance
Stateddifferently,theStatementshowsushowthechangeinCashbalance
materialized
TheStatementofCashFlowsisbrokendownintothreesections:
CashFlowsfromOperations
CashFlowsfromInvesting
CashFlowsfromFinancing
Whatdowelearnbypartitioningcashflowsthisway?
4
CashFlowsfromOperations
TwoBasicMethodsofReporting
1. theindirectmethodderivescashflowsfromaccrualbasis
statements
2. thedirectmethoddeterminescashflowsdirectlyforeach
sourceoruseofcash.
Theindirectmethodisusedextensivelyinpractice,asshown
below.
Theindirectisfavoredbycompaniesfor2reasons:
1.
2.
itiseasiertoprepareand
itfocusesonthedifferencesbetweennetincomeandnetcash
flowfromoperatingactivities.
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IndirectMethod
Reconcilesnetincomeandcashflows
Forcashfromoperatingactivities:
Startswithnetincome
adjustforrevenues/gainsnotprovidingcash
adjustforexpenses/lossesnotusingcash
adds/subtractschangesinworkingcapitalaccounts
(wedontseecashcollectedonsales
likewewouldinthedirectmethod)
Forcashfrominvestingactivities:
Summarizescashinflowsandoutflows
Forcashfromfinancingactivities:
Summarizescashinflowsandoutflows
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CashFlowAnalysis
7
URBAN OUTFITTERS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
January 31,
2006
2005
ASSETS
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net of allowance for doubtful accounts of $445 and
$586, respectively
Inventories
Prepaid expenses and other current assets
Deferred taxes
Total current assets
Property and equipment, net
Marketable securities
Deferred income taxes and other assets
$ 49,912
141,883
14,324
140,377
33,993
4,694
385,183
299,291
64,748
19,983
8,364
98,996
20,123
4,701
287,868
192,792
63,457
12,567
$769,205
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$ 29,731
125,953
$556,684
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Accounts payable
Accrued compensation
Accrued expenses and other current liabilities
Total current liabilities
Deferred rent
Total liabilities
Commitments and contingencies (see Note 10)
Shareholders equity:
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued
Common shares; $.0001 par value, 200,000,000 shares authorized, 164,831,477
and 162,894,888 issued and outstanding, respectively
Additional paid -in capital
Unearned earnings
Accumulated compensation
Retained other comprehensive income
Total shareholders equity
$ 41,291 $ 39,102
12,673
9,584
79,544 49,585
133,508 98,271
74,817 56,169
208,325 154,440
16
16
138,051 109,422
(3,905) (5,058)
426,190 295,394
528
2,470
560,880 402,244
$769,205 $556,684
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URBAN OUTFITTERS, INC.
Consolidated Statements of Income
(in thousands, except share and per share data)
Fiscal Year Ended January 31,
2005
2006
Net sales
Cost of sales, including certain buying,
distribution and occupancy costs
Gross profit
Selling, general and administrative expenses
Income from operations
Interest income
Other income
Other expenses
Income before income taxes
Income tax expense
Net income
Net income per common share:
Basic
Diluted
Weighted average common shares
outstanding:
Basic
Diluted
$
$
$
$
1,092,107
643,501
448,606
240,907
207,699
5,486
775
(1,563)
212,397
81,601
130,796
0.80
0.77
163,717,726
169,936,041
$
827,750
$
489,000
338,750
190,384
148,366
2,577
435
(1,186)
150,192
59,703
90,489
$
$
0.56
0.54
161,419,898
167,303,450
10
2004
$
548,361
$
334,888
213,473
132,767
80,706
1,545
87
(1,034)
81,304
32,928
48,376
$
$
0.31
0.30
157,069,852
161,662,276
UsingthefinancialstatementsprovidedforUrban
Outfitters,answerthefollowingquestions
1.
HowmuchcashdidUrbanOutfitterscollectfrom
customersinthefiscalyearendedJanuary31,2006?
2.
Whatwastheamountofdividendpaymentsto
shareholdersinthefiscalyearendedJanuary31,2006?
3.
Whatisthecostofinventorypurchasedduringthe
fiscalyearendedJanuary31,2006?
4.HowmuchcashdidUrbanOutfitterspaytoitssuppliers
inthefiscalyearendedJanuary31,2006?
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Assumethefollowing:
Allsalesofmerchandiseareonaccount.
Allpurchasesofinventoryareonaccount.
Please,disregardallowancefordoubtfulaccounts.
TherewerenoForeignCurrencyTranslationAdjustments
associatedwithAccountsReceivables,Inventory,
AccountsPayables,andRetainedEarnings.
UrbanOutfitterswasnotinvolvedinanymergersor
acquisitionsinthefiscalyearendedJanuary31,2006.
Assumethatalldistributionstoshareholderswereinthe
formofcashdividends.Alldividendsthataredeclaredin
fiscalyearendedJanuary31,2006arepaidinthesame
fiscalyear.
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1.HowmuchcashdidUrbanOutfitterscollectfrom
customersinthefiscalyearendedJanuary31,2006?
Accounts Receivable
BB
Credit sales
8,364
1,092,107
Cash
collections = x
EB
14,324
x = $1,086,147
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2.Whatwastheamountofdividendpaymentstoshareholdersin
thefiscalyearendedJanuary31,2006?
Retained Earnings
295,394
130,796
BB
Net Income
Dividends
declared and
paid = x
426,190
EB
x=0
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3.Whatisthecostofinventorypurchasedduringthefiscal
yearendedJanuary31,2006?
Inventory
BB
98,996
643,501
Purchases
=x
EB
Cost of goods
sold
140,377
X = 684,882
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4.HowmuchcashdidUrbanOutfitterspaytoitssuppliers
inthefiscalyearendedJanuary31,2006?
Accounts Payable
39,102
684,882
Payment to
supplier = x
41,291
BB
Cost of inventory
purchased
EB
x = 682,693
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