2. Distinguish between the indirect and direct methods of reporting net cash flows provided by (used in) operating activities.
3. How are depreciation and similar noncash items treated on a statement of cash flows?
4. Financial statement analysis can be used to identify a company’s weak areas so that management can work toward improvement. Can financial statement analysis be used for any other purpose? Explain.
5. What is a common-size financial statement? What are its advantages?
6. What benchmarks can be used to add meaning to a computed financial ratio value?
7. Beehive Company had a beginning cash balance of $1,500. In addition, the company reported the following amounts of cash provided by (used in) each category of the statement of cash flows. Using the below information, compute the company’s ending cash balance.
|
Operating activities |
$ 15,350 |
|
Investing activities |
(16,050) |
|
Financing activities |
1,500 |
8. Assume all of the company’s sales are on account. The accounts receivable balance at the beginning of the year was $512, and the ending balance was $481. During the year, the company had sales of $4,526. Compute the amount of cash collections on sales.
9. Using the following information and assuming that all inventory is purchased on account, compute cash paid for inventory:
|
Cost of goods sold |
$ 36,843 |
|
Inventory, beginning balance |
3,110 |
|
Inventory, ending balance |
2,982 |
|
Accounts payable, beginning balance |
2,576 |
|
Accounts payable, ending balance |
2,718 |
10. Using the following data, compute the debt ratio.
|
Accounts Payable |
$ 3,500 |
|
Accounts Receivable |
6,000 |
|
Building |
65,000 |
|
Cash |
2,100 |
|
Capital Stock |
24,300 |
|
Inventory |
4,100 |
|
Land |
14,000 |
|
Long-Term Notes Payable |
32,000 |
|
Market Value of Equity |
103,000 |
|
Net Income |
10,000 |
|
Retained Earnings (ending) |
24,000 |
|
Sales |
105,000 |
|
Short-Term Notes Payable |
5,700 |
|
Stockholders’ Equity |
48,300 |
|
Unearned Revenue |
1,700 |
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