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Unformatted text preview: Assignment #2 Luyao Wang A39824471 1. What is the firm’s overall cash position at year end-2001? How does it compare to year-end 2000? 10,185,000 at year end-2001 17,591,000 at year end-2000 2. According to Statement of Cash Flows, what provided the largest increase to cash? Cash flows from operating activities. Depreciation and amortization 3. Can you tell what’s going on and whether it is a good thing or bad thing by looking at the Statement of Cash Flow? According to Statement of Cash Flows, we can see that Net earnings are decreasing by around $13,000 from 2000 to 2002. This means Oxford Industries are making less and less money year by year. During 2002, inventory quantities were reduced, which resulted in a liquidation of LIFO inventory layers carried at lower costs. The effect of the liquidation was to decrease COGS. Compare fiscal year 2001 and 2002, the Company’s account receivables were negative in 2002 and $62,168,000 in 2001. This is not good because these numbers indicate that the Company has larger debt than the years before. 4. Assess the situation. Did Oxford improve its operations? Explain your reasoning and give citations. Not really. In 2001, its operating cash flow more than doubled, to $74.4 million, from the year before. However, Oxford's footnotes reveal that the surge in cash flow was driven by an $80.5 million sale of receivables. Although Oxford had improved its operations, the apparel maker actually did little more than accelerate collections. Take out the impact of this one-time boost, and Oxford's 2001 operating cash flow would have been negative. (Cash-Flow Hocus-Focus) Oxford Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended May 31, 2002, June 1, 2001 and June 2, 2000 Note A. Summary of Significant Accounting Policies: 1. Principal Business Activity-Oxford Industries, Inc. (the "Company") is engaged in the design, manufacture and sale of consumer apparel for men, women and children. Principal markets for the Company are customers located primarily in the United States. Company-owned manufacturing and distribution facilities are located primarily in the southeastern United States, Central America and Asia. In addition, the Company uses foreign and domestic contractors for other sources of production. 2. Principles of Consolidation-The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All material intercompany balances, transactions and profits have been eliminated. 3. Fiscal Period-The Company's fiscal year ends on the Friday nearest May 31. The fiscal year includes operations for a 52-week period in 2002 and 2001 and a 53-week period in 2000....
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This note was uploaded on 09/10/2010 for the course IAH 001 taught by Professor Wang during the Spring '10 term at Michigan State University.
- Spring '10