Warr22e_IM_TM_Ch16 - Transparency Master 16-1 WRITING...

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Transparency Master 16-1 WRITING EXERCISE Review the following financial data from two companies in the same industry. Comment on any strengths or weaknesses you notice. Income statements: Company A Company B Sales. ...................................................... $500,000 $500,000 Expenses. .............................................. 425,000 425,000 Net income. ............................................ $ 75,000 $ 75,000 Cash held: Beginning of year. ................................. $ 25,000 $ 25,000 End of year. ............................................ 25,000 25,000 Increase in cash. ................................... $ 0 $ 0 A detailed analysis of the cash account reveals the following cash re- ceipts and payments: Cash received: from customers. .............................. $450,000 $350,000 from sale of fixed assets. ............... 5,000 60,000 Total cash received. .............................. $ 455,000 $ 410,000 Cash paid: to suppliers. ..................................... $380,000 $400,000 for purchase of fixed assets. .......... 70,000 10,000 for purchase of investments. ......... 5,000 0 Total cash paid. ..................................... $ 455,000 $ 410,000 Increase in cash. ................................... $ 0 $ 0
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Transparency Master 16-2 WHY ARE CASH FLOWS IMPORTANT? Cash is what pays the bills.
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Warr22e_IM_TM_Ch16 - Transparency Master 16-1 WRITING...

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