Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 1GIC
To determine
Explain the relation between net income, non-working capital adjustments, working capital adjustments, operating cash flows, and EBITDA and primary difference in net income, operating cash flows, and EBITDA.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Based on the short cases on Cash flow preparation, compute the following:
1. For the year ended December 31, 2016, the company has a cash balance of P23,000. The
result of cash flow from operating activities is (P15,000), cash flow from investment
activities is P8,500 while the cash flow from financing activities is P12,250. How much
is the net changes in cash for 2017? How much is the cash balance as of December
2017?
2. For the year ended December 31, 2017, the company had an ending cash balance of
P32,000. During the year, the company result of cash flow from investment activities is
P7,500 while the cash flow from financing activities was P12,500. The cash balance as
of December 31, 2016 is P10,300. How much is the cash flow generated from operating
activities in 2018?
3. For the year ended December 31, 2017, the company had a cash balance of P25,000.
Business transactions for 2018 resulted to a cash flow from operating activities of
(P12,000), cash flow from investment activities…
Consider the balance sheets and selected data from the income statement of Keith Corporation that follow (attached)
a. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2015.
b. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2015.
c. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2015.
d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c).
Refer to the financial statements and related disclosure notes of The Kroger Company for the fiscal year endingJanuary 30, 2016. You can locate the report online from “investor relations” at www.kroger.com.Notice that Kroger’s net income has increased over the three years reported. To supplement their analysis ofprofitability, many analysts like to look at “free cash flow.” A popular way to measure this metric is “structuralfree cash flow” (or as Warren Buffett calls it, “owner’s earnings”), which is calculated as net income from operations, plus depreciation and amortization, minus capital expenditures.Required:Determine free cash flows for Kroger in each of the three years reported. Compare that amount with net incomeeach year. What pattern do you detect?
Chapter 3 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 3 - Need for a Statement of Cash Flows. The accrual...Ch. 3 - Articulation of the Statement of Cash Flows with...Ch. 3 - Classification of Interest Expense. Under U.S....Ch. 3 - Prob. 4QECh. 3 - Classification of Changes in Short-Term Financing....Ch. 3 - Classification of Cash Flows Related to...Ch. 3 - Treatment of Non-Cash Exchanges. The acquisition...Ch. 3 - Computing Cash Collections from Customers....Ch. 3 - Computing Cash Payments to Suppliers. Lowes...Ch. 3 - Computing Cash Payments for Income Taxes. Visa...
Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting the Statement of Cash Flows. The...Ch. 3 - Interpreting the Statement of Cash Flows. Texas...Ch. 3 - Interpreting the Statement of Cash Flows. Tesla...Ch. 3 - Interpreting the Statement of Cash Flows. Gap Inc....Ch. 3 - Prob. 19PCCh. 3 - Prob. 20PCCh. 3 - Interpreting the Statement of Cash Flows....Ch. 3 - Extracting Performance Trends from the Statement...Ch. 3 - Interpreting a Direct Method Statement of Cash...Ch. 3 - Prob. 24PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 26PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 1AICCh. 3 - Prob. 1BICCh. 3 - Prob. 1CICCh. 3 - Prob. 1DICCh. 3 - Prob. 1EICCh. 3 - Prob. 1FICCh. 3 - Prob. 1GICCh. 3 - Prob. 1HICCh. 3 - Prob. 2AICCh. 3 - Prob. 2BICCh. 3 - Prob. 2CICCh. 3 - Prob. 2DICCh. 3 - Prob. 2EICCh. 3 - Prob. 2FICCh. 3 - Prob. 3IC
Knowledge Booster
Similar questions
- (AACSB) AnalysisYou review a company’s statement of cash flows and find that cash inflows from operations are $150,000,net outflows from investing are $80,000, and net inflows from financing are $60,000. Did the company’scash balance increase or decrease for the year? By what amount? What types of activities would you findunder the category investing activities? Under financing activities? If you had access to the company’sincome statement and balance sheet, why would you be interested in reviewing its statement of cash flows?What additional information can you gather from the statement of cash flows?arrow_forwardFinding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow. a. Calculate the firm's net operating profit after taxes (NOPAT) for this year. b. Calculate the firm's operating cash flow (OCF) for the year. c. Calculate the firm's free cash flow (FCF) for the year. d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Assets Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals Keith Corporation Balance Sheets Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity December 31 Income…arrow_forwardYou are given the financial statements of a company for over the 6-year periods (2016 –2021). Considering 2016 as the base year, compute the trend index for the following items:a. Revenue, cost of goods sold, total expenses and net earnings. Comment on the trends of each of the items.b. Total assets, total liabilities and shareholders’ equity. Comment on the trends of each of the items.c. Cash flow from operation, cash flow from investing, cash flow from financing and closing cash balances. Comment on the trends of each of the items.arrow_forward
- The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:a. If sales for the current year were $753,500 and accounts receivable decreased by $48,400 during the year, what was the amount of cash received from customers?b. If income tax expense for the current year was $50,600 and income tax payable decreased by $5,500 during the year, what was the amount of cash payments for income taxes?c. Briefly explain why the cash received from customers in (a) is different from sales.arrow_forwardQuinze Seize Corp. reported the following amounts in its statement of financial position at each year-end:a. What is the net cash provided by operating activities?b. What is the net cash used in investing activities?c. What is the net cash provided by financing activities?arrow_forwardEspinoza Air Conditioning & Heating had the following select financial data as of June 30, 2018. What is Espinoza’s cash ratio? a. 0.34 b. 0.65 c. 0.78 d. 1.54arrow_forward
- The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $375,000 and accounts receivable increased by $29,000 during the year, what was the amount of cash received from customers?$fill in the blank 1 b. If income tax expense for the current year was $39,000 and income tax payable decreased by $21,000 during the year, what was the amount of cash payments for income tax?$fill in the blank 2arrow_forwardConsidering 2012 as the base year, you are required to compute the trend index for the following items: Revenue, cost of goods sold, total expenses and net earnings. Comment on the trends of each of the items. Total assets, total liabilities and shareholders’ equity. Comment on the trends of each of the items. Cash flow from operation, cash flow from investing, cash flow from financing and closing cash balances. Comment on the trends of each of the items.arrow_forwardBased on the following financial statements, convert the 2012 net income to the operating cash flow in that year. The operating cash flow in 2012 is Hint: Pay attention to the sign. Instruction: Type ONLY your numerical answer. No rounding is allowed. Income Statement Garcia Corporation Sales less: Operating Cost less: Depreciation Earnings Before Interest and Taxes less: Interest Earnings Before Taxes less: Taxes: Net Income Cash Receivable Inventory Total Current Assets Fixed Assets Total Assets 4,000 2,700 500 800 2011 200 400 600 1,200 1,500 2011 2,700 - 800 320 480 2012 230 450 700 1,380 Balance Sheet Garcia Corporation 1,500 2012 2,880 4,600 3,080 400 1,120 900 360 540 Accounts Payable. Notes payable Total Current Liabilities. Long-term Debt Common Stock Retained Earnings Total Liabilities and Stockholder's Equity 2011 100 400 500 200 1,600 400 2,700 2012 85 490 575 200 1,600 505 2,880arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning