C214.docx - Session 1 Statement of Cash Flows 1 Define...

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Session 1 Statement of Cash Flows 1. Define Statement of Cash Flows? a. Calculated at the same time as the Income Statement b. It equals Income Statement and changes in the balance sheet c. 2. Define Cash Flows from Operating, Investing, and Financing Activities 3. How does an increase in Accounts receivable impact CFO? Will decrease CFO 4. How does an increase in Accounts payable impact CFO? Will increase CFO 5. Net Income: 100,000 Depreciation: 10,000 Change in Operating Assets = 15,000 Change in Operating Liabilities = (5,000) PPE (net) on 1/1/15 = 40,000 PPE(net) on 12/31/15 = 80,000 Change in Long Term Liabilities = 20,000 Change in common stock = 15,000 Dividends paid = 6,000 a. Calculate CFO? b. Calculate CFI? c. Calculate CFF? 1 | P a g e
Financial Statements 1. A high-quality customer just purchased $500,000 worth of product from your company. The contract calls for immediate delivery of the product with a cash payment of $300,000 today and $200,000 to be paid 60 days. The expense associated with the product is $300,000, of which $100,000 has not been paid to your supplier. Under accrual based accounting system, how much revenue and expense will the company report? Rev – 500,000 and Expenses 300,000 2. A firm reported retained earnings of $500 in 12/31/20x2. For 12/31/20x3, the firm reports sales of $2,000, margin of 25% and dividend payout ratio of 50%. What is the retained earnings on 12/31/x3? 125 3. What financial statement is prepared at a point in time? Balance Sheet 4. What financial statements are prepared for a period of time? Income Statement Time Value of Money 1. A stock will be worth $50 at the end of the year and will pay a dividend of $5. How much should an investor pay for the stock if the investor expects a rate of return of 15%? 2. An investor paid $45 for a stock today that will pay a dividend of $5 at the end of the year.

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