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Shown below free cash flow analysis net cash provided

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shown below: Free Cash Flow Analysis Net cash provided by operating activities ............................ $41,200 Less: Purchase of land .......................................................... 38,000 Dividends ...................................................................... 10,000 Free cash flow ......................................................................... $ (6,800 )
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PROBLEM 5-7 (Continued) Its current cash debt coverage is 1.18 to 1 $41,200 $35,000* . Overall, it appears that its liquidity position is average and overall financial flexibility should be improved. *($30,000 + $40,000) ÷ 2 (d) This type of information is useful for assessing the amount, timing, and uncertainty of future cash flows. For example, by showing the specific inflows and outflows from operating activities, investing activities, and financing activities, the user has a better understanding of the liquidity and financial flexibility of the enterprise. Similarly, these reports are useful in providing feedback about the flow of enterprise resources. This information should help users make more accurate predictions of future cash flow. In addition, some individuals have expressed concern about the quality of the earnings because the measurement of the income depends on a number of accruals and estimates which may be somewhat subjective. As a result, the higher the ratio of cash provided by operating activities to net income, the more comfort some users have in the reliability of the earnings.
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CA 5-2 Current Assets Current Liabilities Interest receivable on U.S. gov. securities. Preferred cash dividend, payable Nov. 1, 2012. Notes receivable. Income taxes payable. Petty cash fund. Customers’ advances (on contracts to be Debt investments (trading). completed next year). Cash in bank. Premium on bonds redeemable in 2012. Inventory of operating parts and supplies. Officers’ 2012 bonus accrued. Inventory of raw materials. Accrued payroll. Accounts receivable. Notes payable. U.S. government contracts. Interest payable. Regular (less allowance for doubtful accounts). Accounts payable. Accrued interest on notes payable. Installments—due next year. 8% First mortgage bonds to be redeemed in 2012. Inventory of finished goods. Inventory of work in process. Borderline cases that have been classified on the basis of assumptions are: 1. Notes receivable are assumed to be collectible within one year or the operating cycle. 2. Debt investments (trading) are assumed to be a temporary investment of current funds. 3. Accounts receivable—government contracts are assumed to be collectible within one year or the operating cycle. 4. Notes payable are assumed to be due within one year or the operating cycle. ( Note to instructor: Allowance for doubtful accounts receivable is not a current asset. It, however, would appear in the current asset section.) IFRS5-2 Among the similarities between IFRS and U.S. GAAP related to statement of financial position presentation are as follows:
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IAS 1 specifies minimum note disclosures. These must include information about (1) accounting policies followed, (2) judgments that management has made in the process of applying the entity’s accounting policies, and (3) and the key assumptions and estimation uncertainty that could result in a material adjustment
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  • Spring '08
  • JCEasterwood
  • Balance Sheet, ........., Generally Accepted Accounting Principles

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