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 1AIC
To determine
Explain the subtraction of equity in income of investors in conversion of cash flow from operations.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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).
Consider the financial statements
alongside the notes presented by Simple
Things Industries and prepare the
statement of cash flows for the year
ended December 31, 2014.
Assets
Current:
Cash
Accounts Receivable
Inventory
Plant assets, net
Total Assets
Liabilities
Current:
Accounts payable
Accrued liabilities
Long-term notes payable
Stockholders' Equity
Common S tock
Retained earnings
Treasury stock
Total liabilities and stockholders' equity
Revenues and gains:
Sales revenue
Interest revenue
Dividend revenue
Gain on sale of plant assets
Total revenues and gains
Simple Things Industries Ltd.
Comparative Balance Sheet
December 31, 2014 and 2013
Expenses
Cost of goods sold
Salary and wages expense
Depreciation expense
Other operating expense
Interest expense
Income tax expense
Total expenses
Net Income/(Loss)
Simple Things Industries Ltd
Income Statement
Year Ended December 31,2014
Notes
Acquisition of plant asset during 2014
Sale proceeds from sale of plant asset
Receipt for issuance of…
The following table is from the Home Depot Website. Which number should be used for EBIT in order to calculating the component of Operating Cashflows (OCF), for Q1 of 2022 (in millions).
THE HOME DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
in millions, except per share data
Net sales
Cost of sales
Gross profit
Operating expenses:
Selling, general and administrative
Depreciation and amortization
Total operating expenses
Operating income
Interest and other (income) expense:
Interest income and other, net
Interest expense
Interest and other, net
Earnings before provision for income taxes
Provision for income taxes
Net earnings
O 5560
5929
O4145
O 5781
(Unaudited)
$
Three Months Ended
May 1,
2022
38,908 $
25.763
13.145
6,610
606
7,216
5,929
(3)
372
369
5,560
1.329
$ 4,231
May 2,
2021
37,500
24,758
12.742
6,374
587
6.961
5,781
(6)
339
333
5,448
1,303
4,145
4
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
- Based 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_forwardCash flow identity. Use the data from the following financial statements in the popup window,. The company paid interest expense of $17,100 for 2017 and had an overall tax rate of 40% for 2017. Verify the cash flow identity: cash flow from assets = cash flow to creditors + cash flow to owners The cash flow from assets is $ (Round to the nearest dollar.)arrow_forwardUse the following data (in millions) for Company O, Inc. (COOI), for a recent year to answer the questions below: Retained earnings, beginning of year $22,110 Retained earnings, end of year 24,210 Net cash flows from (used for) operating activities 3,850 Net increase (decrease) in cash 3,360 Net cash flows from (used for) financing activities 470 Enter negative values beginning with a minus sign. a. Determine Company O’s net income (loss) for the year, assuming no dividends were paid during the year. b. Determine the net cash flows from (used for) investing activities for the year.arrow_forward
- Finding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow. a. Calculate the firm's net operating profit after taxes (NOPAT) for this year. b. Calculate the firm's operating cash flow (OCF) for the year. c. Calculate the firm's free cash flow (FCF) for the year. d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Assets Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals Keith Corporation Balance Sheets Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity December 31 Income…arrow_forwardFollowing is selected financial information from General Mills, Inc., for its fiscal year ended May 31, 2020 ($ millions). Cash and cash equivalents, end of year. Net cash from operations.. Net sales. Stockholders' equity, end of year Cost of goods sold. Net cash from financing. Total liabilities, end of year. Other expenses, including income taxes Noncash assets, end of year. Net cash from investing Net income... Effect of exchange rate changes on cash Cash and cash equivalents, beginning of year. pg. 1-35 a. .... .... $ 1,677.8 3,676.2 17,626.6 8,894.1 11,496.7 (1,941.5) 21,912.6 3,919.1 29,128.9 (486.2) 2,210.8 (20.7) 450.0 ? REQUIRED Prepare an income statement, balance sheet, and statement of cash flows for General Mills, Inc.arrow_forwardCalculate income from operations and net income Selected information taken from the financial statements of Fordstar Co. for the year ended December 31 2013, follows: Net cash provided by operations... Cost of goods sold.... Selling, general, and administrative expenses Accounts payable... Dividends paid.. Research and development expenses. Merchandise inventory... $ 49,000 155,000 62,000 45,000 63,000 15,000 39,000 Provision for income taxes 420 000 Net sales .... 32 000 Interest expense Calculate income from operations (operating income) for the year ended December 31, 2013. (Hint: You may wish to review Exhibit 2-2.) Calculate net income for the year ended December 31, 2013.arrow_forward
- Espinoza 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_forwardStarrKnight Corporation's Balance Sheet and Income Statement as shown below: a) What is the operating cycle in 2016 for StarrKnight Corporation? b) What is StarrKnight Corporation's cash cycle for 2016?arrow_forward(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_forward
- The income statement and additional data of Grand Corporation follow: (Click the icon to view the Income Statement.) (Click the icon to view the addit Prepare Grand Corporation's statement of cash flows for the year ended June 30, 2024. Use the direct in the statement leave the box empty; do not select a label or enter a zero.) Complete the statement one section at a time, beginning with the cash flows from operating activities. Grand Corporation Statement of Cash Flows Year Ended June 30, 2024 Cash Flows from Operating Activities: Receipts: Total Cash Receipts Payments: Total Cash Payments Net Cash Provided by (Used for) Operating Activities Data table Grand Corporation Income Statement Year Ended June 30, 2024 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Depreciation Expense-Plant Assets Advertising Expense Total Operating Expenses Operating Income Other Income and (Expenses): Dividend Revenue Interest Expense Total Other Income and…arrow_forwardStatement of Cash Flows The following is a list of items for Witts Company's 2016 statement of cash flows: a. receipt from sale of equipment, $2,700 b. increase in inventory, $3,900 c. net income, $13,500 d. payment for purchase of building, $29,000 e. depreciation expense, $8,700 f. receipt from issuance of bonds, $8,000 g. increase in prepaid expenses, $800 h. loss on sale of equipment, $2,200 i. payment of dividends, $5,200 j. decrease in accounts receivable, $1,700 k. issuance of common stock for land, $6,900 I. decrease in accounts payable, $1,500 m. beginning cash balance, $10,200 Required: 1. Prepare the statement of cash flows. Use a minus sign to indicate cash outflows, a decrease in cash or cash payments. WITTS COMPANY Statement of Cash Flows For Year Ended December 31, 2016 Operating Activities: Adjustment for noncash income items: Adjustments for cash flow effects from working capital items: Investing Activities:arrow_forwardUsing the financial statements and additional information below, prepare a cash flow statement for Papa Ltd for the year ended 31st December 2018 using the indirect method of calculating operating cash flow and write a brief comment on the cash flow for the period. Papa Ltd Statement of Profit or Loss Account for the year ended 31st December 2018 GHC Revenue 540,000 Cost of sales (155,000) Gross profit 385,000 Investment income – interest received 15,000 Loss on disposal of equipment (18,000) Depreciation (94,000) Administrative and selling expenses (25,000) Operating profit before interest 263,000 Interest expense (10,000) Profit before taxation 253,000 Taxation (56,000) Profit after tax 197,000 Statement of financial position as at 31st December 2018 2017 GHC GHC Non-current assets Vehicle at cost 180,000 150,000 Accumulated depreciation (137,000)…arrow_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