Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 3CRCT
Summary Introduction
To discuss: Whether the below items are the sources or uses and their effects on the company’s cash balance
Introduction:
Sources of cash: The activities which increases the cash is termed as sources of funds
Uses of cash: The activities which decreases the cash is termed as uses of funds
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
5. You are trying to estimate the free cash flow to the firm for Wadhwa Inc. and are looking at its most recent financial filings: the annual report for the last fiscal year and its most recent quarterly report for the first three quarters of the current year. Estimate the free cash flow to the firm over the most recent twelve months.
Consider the case of Hungry Whale Electronics Company:
Hungry Whale Electronics Company is a mature firm that has a stable flow of business. The following data was taken from its financial statements last year:
Annual sales
$10,500,000
Cost of goods sold
$6,825,000
Inventory
$3,100,000
Accounts receivable
$1,900,000
Accounts payable
$2,400,000
Hungry Whale’s CFO is interested in determining the length of time funds are tied up in working capital. Use the information in the preceding table to complete the following table. (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.)
Value
Inventory Conversion Period
Average collection period
Payables Deferral Period
Cash conversion cycle
Both the inventory conversion period and payables deferral period use the average daily COGS in their denominators, whereas the average collection period uses average daily sales in…
See the cash flow statement
LOADING...
(all values in thousands of dollars) (see MyLab Finance for the data in Excel format):
a. What were the company's cumulative earnings over these four quarters? What were its cumulative cash flows from operating activities?
b. What fraction of the cash from operating activities was used for investment over the four quarters?
c. What fraction of the cash from operating activities was used for financing activities over the four quarters?
a. What were the company's cumulative earnings over these four quarters?
The cumulative earnings were $enter your response here
(000). (Round to the nearest integer.)
Part 2
What were its cumulative cash flows from operating activities?
The cumulative cash flows from the operating activities were $enter your response here
(000). (Round to the nearest integer.)
b. What fraction of the cash from operating activities was used for investment over the four quarters?
The fraction of the cash from operating…
Chapter 18 Solutions
Fundamentals of Corporate Finance
Ch. 18.1 - What is the difference between net working capital...Ch. 18.1 - Prob. 18.1BCQCh. 18.1 - List five potential sources of cash.Ch. 18.1 - Prob. 18.1DCQCh. 18.2 - Prob. 18.2ACQCh. 18.2 - Prob. 18.2BCQCh. 18.2 - Prob. 18.2CCQCh. 18.3 - What keeps the real world from being an ideal one...Ch. 18.3 - What considerations determine the optimal size of...Ch. 18.3 - Prob. 18.3CCQ
Ch. 18.4 - Prob. 18.4ACQCh. 18.4 - Prob. 18.4BCQCh. 18.5 - Prob. 18.5ACQCh. 18.5 - Describe two types of secured loans.Ch. 18.6 - Prob. 18.6ACQCh. 18.6 - In Table 18.6, what would happen to Fun Toys...Ch. 18 - Prob. 18.1CTFCh. 18 - A firm has an operating cycle of 64 days and a...Ch. 18 - Prob. 18.4CTFCh. 18 - Prob. 18.5CTFCh. 18 - Operating Cycle [LO1] What are some of the...Ch. 18 - Prob. 2CRCTCh. 18 - Prob. 3CRCTCh. 18 - Cost of Current Assets [LO2] Loftis Manufacturing,...Ch. 18 - Operating and Cash Cycles [LO1] Is it possible for...Ch. 18 - Use the following information to answer Questions...Ch. 18 - Use the following information to answer Questions...Ch. 18 - Prob. 8CRCTCh. 18 - Use the following information to answer Questions...Ch. 18 - Use the following information to answer Questions...Ch. 18 - Changes in the Cash Account [LO4] Indicate the...Ch. 18 - Prob. 2QPCh. 18 - Changes in the Operating Cycle [LO1] Indicate the...Ch. 18 - Prob. 4QPCh. 18 - Calculating Cash Collections [LO3] The Morning...Ch. 18 - Prob. 6QPCh. 18 - Prob. 7QPCh. 18 - Calculating Payments [LO3] Sedman, Corp., has...Ch. 18 - Calculating Payments [LO3] The Torrey Pine...Ch. 18 - Calculating Cash Collections [LO3] The following...Ch. 18 - Calculating the Cash Budget [LO3] Here are some...Ch. 18 - Prob. 12QPCh. 18 - Prob. 13QPCh. 18 - Prob. 14QPCh. 18 - Calculating the Cash Budget [LO3] Wildcat, Inc.,...Ch. 18 - Prob. 16QPCh. 18 - Costs of Borrowing [LO3] In exchange for a 400...Ch. 18 - Prob. 18QPCh. 18 - Prob. 1MCh. 18 - Prob. 2MCh. 18 - Prob. 3M
Knowledge Booster
Similar questions
- Need help with sources and uses analysis and a statement of cash flow... Total Fixed Assets: Last year= 640 This year= 668 Capital shares: Last year= 500 This year= 400 Retained Earnings: Last year=64 This year= 106arrow_forward1) Firm A has profit margin of 7.5%, sales revenue of $1 million, dividend payout ratio of 60%, debt-equity ratio of 2, and total assets of $3 million. Calculate the internal growth rate for Firm A. 2)Calculate the net impact on cash given the following information: decrease in accounts receivable= $30; decrease in inventory= $45; net fixed asset Disposals= $75; decrease in accounts payable= $27; increase in notes payable= $30; increase in long-term debt= $105; decrease in retained earnings= $18; decrease in common stock= $600.arrow_forwardAssume a firm generates $2,200 in slaes and has a $300 increase in accounts recieveables during an accoutning period. Based soley on this information, cash flow will increase by ? Please explain.arrow_forward
- Problem 1. Odette Electronics has 90 operating plants in seven southwestern states. Sales for last year were P100 million, and the statement of financial position at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. Statement of Financial Position (in P millions) Assets Liabilities andEquity Cash... P2 Accountspayable P15 Accountsreceivable... 20 Accruedwages... ..2 Inventory.... 23 Accruedtaxes... 8 Currentassets.. P45 Currentliabilities... P25 Fixedassets..... 40 Notespayable . .10 Ordinaryshares... . 15 Retainedearnings.. 35 Totalassets... P85 Total liabilitiesandequity... P85 Odette's has an after-tax profit margin of 7 percent and a dividend payout ratio of 40 percent. If sales grow by 10 percent next year, determine how much of new funds are needed to finance the growth.arrow_forwardQuestion A Blossom Corporation reported EBITDA of $7,299,875 and net income of 3,789,692.44 last year. The company also had $1,155,390 in interest expense, $1,023,279 in depreciation and amortization expense, and an average corporate tax rate of 26 percent. What was the firm's cash flow to investors from operating activity during the year? Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line. .arrow_forwardAnalyzing Cash Flow Ratios Meagan Enterprises reported the following information for the past year of operations:For each transaction, indicate whether the ratio will (I) increase, (D) decrease, or (N) have no effect. Transaction FreeCash Flow$400,000 Operating-Cash-Flow-to-Current Liabilities Ratio1.1 times Operating-Cash-Flow-to-Capital Expenditures Ratio5.0 times a. Recorded credit sales of $17,000 b. Collected $6,000 owed from customers c. Purchased $50,000 of equipment on long-term credit d. Purchased $70,000 of equipment for cash e. Paid $17,000 of wages with cash f. Recorded utility bill of $14,750 that has not been paidarrow_forward
- Problem 1: A company has got $500 in cash and cash equivalents, $300 in inventory and $200 in account receivables. The firm has long term assets of $500. The firm has accounts payables of $200. All other current liabilities total $400. The firm had sales of $10000, EBIT of $5000, interest expenses of $2000 and net income of $800. Compute the following ratios: Current ratio DSO TIE profit margin Total asset turnover Problem 2: A firm has current liabilities of $500. Account receivables are $300 and inventory is $400. All other current assets equal $800. Long term assets are $5000, long term liabities are $2500, sales is $8000, EBIT is $2000, interest expenses are $600 and net income is $100. Compute the following ratios: Current ratio Debt ratio TIE ROA DSO Current ratio = total current assets/total current liabilities Days Sales Outstanding (DSO) = (accounts receivable*365)/sales Times Interest Earned (TIE) ratio = EBIT/interest expense Total asset turnover = sales/total…arrow_forwardUse the following financial data of Houston Corporation to answer the next two questions. Houston's Cash Flows for the year: Net Cash Flow from Operations Interest Expense Before Tax Net Change in Cash Required for Operations Net Cash Flow from Investing Net Cash from Debt Financing Effective Income Tax Rate (in thousands of dollars) 564 150 -75 -287 210 20%arrow_forwardQuestion Statement of Cash flows Analysis Analyze the statement of cash flows of the companies and find the answers of the followings 1. Are cash flows from operations positive? What is the trend for three years? 2. Is operating cash flows smaller or larger than net income?arrow_forward
- According to the information given in the table below, which of the following is cash flow from financing? Net income 68,300 Decrease in Bank Loan 49,400 Increase in Bonds 22,500 Decrease in Equipment 38,250 Increase in Common stock 41,000 Select one: a. 30100 b. 55200 c. 33000 d. 14100arrow_forwardFor the fiscal year just ended, Yoran Electronics had the following results: Net income 920,000; Depreciation expense 110,000; Increase in accounts payable 45,000; Increase in accounts receivable 73,000; Increase in marketable securities 40,000; Increase in deferred income tax liability 16,000; Decrease in Long-term debt 200,000. How much is the firm’s net cash flows from operating activities?arrow_forward24. Lense Laboratories' net income was $250,000. Given the account information below, what is the net operating cash flows for Lense Laboratories? Increase in Accounts Receivable Increase in Salaries Payable Decrease in Bond Discount Depreciation Expense Increase in Prepaid Insurance A. B. C. D. $152,000. $278,000. $312,000. $438,000. $60,000 $50,000 $30,000 $45,000 $3,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning