Lecture09 - Lecture 9 Statement of Cash Flows and Cash Flow...

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1 Lecture 9 Statement of Cash Flows and Cash Flow Analysis
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2 Review Getting from Net Income to Cash Flow from Operations (CFFO) requires: • Add other non-cash expenses (bad debt expense, provision for excess and obsolete inventory) – Adding decreases in A/R and Inventory • Add decreases in other current assets (pre-paid expenses, deferred tax assets) – Adding increases in A/P • Add increases in other current liabilities (accrued compensation, deferred revenue, taxes payable) – Adding non-cash losses and charges • Restructuring charges, asset impairments, write-downs, losses from discontinued operations, dispositions Vice versa if the balance sheet accounts change in the other direction
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3 Today • Further analysis of the main working capital accounts (A/R, Inv., A/P) that can affect cash flows quite a bit – How much cash did the A/R department collect from customers? On average, how many days did it take to collect the cash? – How much new inventory did the inventory manager purchase? On average, how many “days of inventory” do we have? – How much cash did the A/P department spend to pay for the inventory purchases? On average, how many days does it take for us to pay our suppliers?
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4 T-Accounts • Use of T-Accounts may help in the calculations – Balance sheet T-Accounts: Cash, A/R, Inventory, A/P, Retained Earnings – Income statement T-Accounts: Sales, COGS
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5 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 $ 49,912 $ 29,731 Marketable securities 141,883 125,953 Accounts receivable, net of allowance for doubtful accounts of $445 and $586, respectively 14,324 8,364 Inventories 140,377 98,996
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This note was uploaded on 06/28/2009 for the course ACCT 101 taught by Professor Armstrong during the Summer '09 term at UPenn.

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Lecture09 - Lecture 9 Statement of Cash Flows and Cash Flow...

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