constructing and analyzing statement of cash flows.

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This assignment covers constructing and analyzing statement of cash flows.

Demonstration (showing the work) and Resultant Answer.

Assignments:

CHAPTER 2: #28 parts a,c, and c only

Statement of cash flows

28. Refer to the following financial statements for Crosby Corporation attached below.

a. Prepare a statement of cash flows for the Crosby Corporation using the general procedures indicated in Table 2-10.

b. Describe the general relationship between net income and net cash flows from operating activities for the firm.

c. Has the buildup in plant and equipment been financed in a satisfactory manner? Briefly discuss.

 

Block, S., Hirt, G., & Danielsen, B. (2013). Foundations of financial management (16th Ed). Retrieved from http://online.vitalsource.com

 

This assignment covers constructing and analyzing statement of cash flows.

Demonstration (showing the work) and Resultant Answer.

Assignments:

CHAPTER 2: #28 parts a,b, and c only

Statement of cash flows

28. Refer to the following financial statements for Crosby Corporation:

 

CROBY CORPORATION Income Statement For the Year Ended December 31, 20X2
Sales $ 2,200,000  
Cost of goods sold 1,300,000  
Gross Profit $ 900,000  
Selling and Administrative expense 420,000  
Depreciation expense 150,000  
Operating Income $ 330,000  
Interest expense 90,000  
Earnings before taxes $ 240,000  
Taxes   80,000  
Earnings after taxes $ 160,000  
Preferred Stock dividends 10,000  
Earnings available to common stockholders $ 150,000  
Shares outstanding 120,000  
Earnings per share $ 1.25  

 

 

Statement of Retaining Earnings

For the Year Ended December 31, 2015
Retaining earnings, balance, January 1, 20X2 $500,000  
Add: Earnings available to common stockholders, 20X2 150,000  
Deduct: Cash dividends declared and paid in 20×2 50,000  
Retained earnings, balance December 21, 20X2 $ 600,000  

 

 

Comparative Balance Sheets For 20X1 and 20X2
YEAR END FOR 20X1 20X2
Assets    
Current Assets    
Cash $ 70,000 $100,000
Accounts receivable (net) $ 300,000 $ 350,000
Inventory 410,000 430,000
Prepaid expenses 50,000 30,000
Total current assets $ 830,000 $ 910,000
Investments (long-term securities) 80,000 70,000
Plant and equipment 2,000,000 2,400,000
Less: Accumulated depreciation 1,000,000 1,150,000
Net plant and equipment 1,000,000 1,250,000
Total assets $1,910,000 $2.230.000
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $ 250,000 $ 440,000
Notes payable 400,000 400,000
Accrued expenses 70.000 50 000
Total current liabilities $ 720,000 $ 890,000
Long term liabilities:    
Bonds payable, 20X2 70,000 120,000
Total liabilities    
Stockholders’ equity:    
Preferred stock, $100 par value $ 90,000 $ 90,000
Common stock, $1 par value 120,000 410,000
Capital paid in excess of par 410,000 410,000
Retained earnings 500,000 600,000
Total stockholders’ equity $1,120,000 $1,220,000
Total liabilities and stockholders’ equity $1,910,000 $2,230,000

 

 

a. Prepare a statement of cash flows for the Crosby Corporation using the general procedures indicated in Table 2-10.

b. Describe the general relationship between net income and net cash flows from operating activities for the firm.

c. Has the buildup in plant and equipment been financed in a satisfactory manner? Briefly discuss.

Table 2-10

KRAMER CORPORATION Statement of Cash Flows For the Year Ended December 31, 2015
Cash flows from operating activities:    
Net income (earnings after taxes)   $ 110,500
Adjustments to determine cash flow from operating activities:    
Add back depreciation $ 50,000  
Increase in accounts receivable (30,000)  
Increase in inventory (20,000)  
Decrease in prepaid expenses 10,000  
Increase in accounts payable 35,000  
Decrease in accrued expenses     (5,000)  
Total adjustments        40,000
Net cash flows from operating activities   $ 150,500
Cash flows from investing activities:    
Increase in investments (long-term securities) $(30,000)  
Increase in plant and equipment (100,000)  
Net cash flows from investing activities   (130,000)
Cash flows from financing activities:    
Increase in bonds payable $ 50,000  
Preferred stock dividends paid (10,500)  
Common stock dividends paid   (50,000)  
Net cash flows from financing activities      (10,500)
Net increase (decrease) in cash flows   $   10,00

Leadership And Development

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Please add what Prof told me such as putting more leadership theories on it. Please read the guildline carefully. it has to be CRITICAL. Use book or journal resources. Prof wants me to write and add more for this paper. Here is his comments: “Thank you for your paper. I am afraid this is very so-so. The paper is rather descriptive and the exams you give are rather formulaic i.e. he cares because he listens so that makes him a leader, more is needed here! Furthermore, you do not actually address all the questions of the brief – it is not clear what his leadership style is, nor who the followers are exactly and what they think of him. Furthermore, a lot of the evidence of success of the company may well have nothing to do with leadership – it is dangerous to establish a causal connection here when there may be other factors involved. Finally, there is very little in terms of leadership theory or evidence of further reading. My suggestion is that you read up on leadership and finding further sources of theory, and then reconsider Marriott’s behaviour and actions; moreover, you should certainly address all questions in the brief.” <Assignment Overview > You are required to choose a leader within the hospitality industry. exploring the following issues: 1. What behaviours and actions illustrate leadership?(as opposed to management) 2. Which style(s) of leadership is this leader more comfortable with and why? 3. What is the evidence of followership in terms of this leader and what effect has this had on the organization as a whole? 4. What useful lessons can be learned from this leader which could be transferred to the hospitality industry as a whole? <Learning outcomes> -Distinguish between management and leadership -understand different styles of leadership as related to culture, task and situation -Apply leadership tools to a number of leadership case studies <Organization and methodology> Ensure that your paper is critical rather than descriptive. Any biographical data should be provided in an appendix rather than the main text which should concentrate on the issues mentioned above. Your paper should be rich in examples of actions that support the development of your discussion. Full referencing is required. <Assessment tasks & weighting> Structure and organization : 10% Knowledge : 10% Critical Skills : 30% Application/Examples : 30% Referencing : 20% cruise Textbook: “Level Three Leadership – getting below the surface”, by James G.Clawson

Teuer Furniture (B): Multiples Valuation CASE

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You are an analyst reporting to Jennifer Jerabek, CFO of Teuer Furniture. As noted in the case, several Teuer’s investors have taken issue with the FCF DCF analysis done previously.  They believe that DCF analysis is unreliable since it requires dozens or hundreds of assumptions about the future of the company.  Jerbek (and you) have been instructed to prepare a valuation that does not depend on assumptions about future growth, profitability, capital investment or require discretion by the finance team.   She has asked you to value the company using the market multiples approach.  Your analysis should include a discussion about whether your analysis is free of any assumptions about the future of the company or based on any discretionary choices on your part.  Detail your analysis in a one-page report.

BACKGROUND ATTACHED

CASE ATTACHED

Background to Teuer Furniture

Teuer Furniture was launched in 2003 to serve the demand for high-quality designer furniture sold in a high-touch environment outside of the major metropolitan areas. The firm opened its first showroom in Omaha and has since grown to 29 showrooms, concentrating on second-tier cities such as Des Moines (Iowa), Columbia (Missouri) and Lawrence (Kansas). The company has plans to open six additional showrooms over the next three years. These showrooms will be in the same region of the country and be served by the company’s centrally located distribution center.

The company sells a range of styles of furniture for all rooms of the home. The distinguishing feature of Teuer is that all of its offerings are very high-quality and are targeted to upper-income customers who are willing to spend money but have limited time. Key to the Teuer buying experience is a focus on convenience and customer service provided by an attentive but low-pressure sales staff. As a result, a large portion of sales in established showrooms was to repeat customers and friends of past customers. The company used in-store technology to enhance the shopping experience. For examples, sales associates could quickly pull up 3D pictures of furniture showing any of the offered patterns and styles, making it easier for customers to envision the final product. Included in the price of Teuer furniture was complementary delivery and set-up.

Teuer does not manufacture any of the furniture it sells but relies on a network of domestic producers, mainly in the southeast, who design and manufacture products that are sold under the Teuer brand name. While the company carried fewer furniture lines than many of its competitors, the carried a wide range of customization options (fabrics, styles, patterns) for those it did carry.

Incremental Analysis And Capital Budgeting

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38. A major accounting contribution to the managerial decision-making process in evaluating

possible courses of action is to

a. assign responsibility for the decision.

b. provide relevant revenue and cost data about each course of action.

c. determine the amount of money that should be spent on a project.

d. decide which actions that management should consider.

 

39. Which of the following stages of the management decision-making process is improperly

sequenced?

a. Evaluate possible courses of action Æ Make decision.

b. Assign responsibility for the decision Æ Identify the problem.

c. Identify the problem Æ Determine possible courses of action.

d. Assign responsibility for decision Æ Determine possible courses of action.

 

40. Internal reports that review the actual impact of decisions are prepared by

a. department heads.

b. the controller.

c. management accountants.

d. factory workers.

 

41. Which of the following steps in the management decision-making process does not

generally involve the managerial accountant?

a. Determine possible courses of action

b. Make the appropriate decision based on relevant data

c. Prepare internal reports that review the impact of decisions

d. None of these

 

The process of evaluating financial data that change under alternative courses of action is

called

a. double entry analysis.

b. contribution margin analysis.

c. incremental analysis.

d. cost-benefit analysis.

 

43. Nonfinancial information that management might evaluate in making a decision would not

include

a. employee turnover.

b. contribution margin.

c. the environment.

d. the corporate profile in the community.

 

44. Incremental analysis is synonymous with

a. difficult analysis.

b. differential analysis.

c. gross profit analysis.

d. derivative analysis.

 

45. In incremental analysis,

a. only costs are analyzed.

b. only revenues are analyzed.

c. both costs and revenues may be analyzed.

d. both costs and revenues that stay the same between alternate courses of action will

be analyzed.

 

46. Incremental analysis is most useful

a. in developing relevant information for management decisions.

b. in choosing between the net present value method and the internal rate of return

method.

c. in evaluating the master budget.

d. as a replacement technique for variance analysis.

 

47. The source of data to serve as inputs in incremental analysis is generated by

a. market analysts.

b. engineers.

c. accountants.

d. all of these.

 

Which of the following is not a true statement?

a. Incremental analysis might also be referred to as differential analysis.

b. Incremental analysis is the same as CVP analysis.

c. Incremental analysis is useful in making decisions.

d. Incremental analysis focuses on decisions that involve a choice among alternative

courses of action.

 

49. Incremental analysis would not be appropriate for

a. a make or buy decision.

b. an allocation of limited resource decision.

c. elimination of an unprofitable segment.

d. analysis of manufacturing variances.

 

Incremental analysis would be appropriate for

a. acceptance of an order at a special price.

b. a retain or replace equipment decision.

c. a sell or process further decision.

d. all of these.

 

51. Which of the following is a true statement about cost behaviors in incremental analysis?

1. Fixed costs will not change between alternatives.

2. Fixed costs may change between alternatives.

3. Variable costs will always change between alternatives.

a. 1

b. 2

c. 3

d. 2 and 3

 

52. A company is considering the following alternatives:

Alternative 1 Alternative 2

Revenues $120,000 $120,000

Variable costs 60,000 70,000

Fixed costs 35,000 35,000

Which of the following are relevant in choosing between the alternatives?

a. Variable costs

b. Revenues

c. Fixed costs

d. Variable costs and fixed costs

 

53. It costs Harmon Company $12 of variable and $5 of fixed costs to produce one bathroom

scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at

$15 each. Harmon would incur special shipping costs of $1 per scale if the order were

accepted. Harmon has sufficient unused capacity to produce the 2,000 scales. If the

special order is accepted, what will be the effect on net income?

a. $4,000 increase

b. $4,000 decrease

c. $6,000 decrease

d. $30,000 increase

 

Adler Company manufactures a product with a unit variable cost of $50 and a unit sales

price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced

and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70

each in a foreign market which would not affect its present sales. If the company has

sufficient capacity to produce the additional units, acceptance of the special order would

affect net income as follows:

a. Income would decrease by $4,000.

b. Income would increase by $4,000.

c. Income would increase by $70,000.

d. Income would increase by $20,000.

 

55. In incremental analysis,

a. costs are not relevant if they change between alternatives.

b. all costs are relevant if they change between alternatives.

c. only fixed costs are relevant.

d. only variable costs are relevant