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Homework answers / question archive / Condensed financial data of Pat Metheny Company for 2008 and 2007: Comparative Balance Sheet 2008 2007 cash 1,800
Condensed financial data of Pat Metheny Company for 2008 and 2007:
Comparative Balance Sheet 2008 2007
cash 1,800. 1,150.
receivables 1,750. 1,300.
inventory 1,600. 1,900.
plant assets 1,900. 1,700.
Accum. deprec. (1,200) (1,170)
Long term invest. held to maturity 1,300. 1,420.
accounts payable 1,200 900.
accrued liabilities 200. 250.
bonds payable 1400. 1550
captial stock 1900 1700.
retained earnings 2450. 1900.
Sales 6900
cost of goods sold 4700
Selling and admin. expense 930
Gain on sale of investments 80
Income before tax 1350
income tax expense 540
Cash dividends 260. NEED TO FIGURE INTO THE CASHFLOWS
income retained in business 550. During the year $70. of common stock
was issued in exchange for plant assets.
No plant assets were sold in 2008.
PFA
Cash flow comes from:
Operating activities
Investment activities
Financing activities
Operating Activities
Cash flow from operating activities relates to cash generated or paid out through the normal cash generating activities of the enterprise. The enterprise need to generate enough cash flow from these activities as they are the main sources of cash for the business. Cash flow from operating activities will be used to repay loans, maintain the operating capabilities of the enterprise and make new investments.
Cash flow from operating activities includes:
a) cash received from sale of goods or provision of services;
b) cash received from royalties, fees, commission and other revenues;
c) cash payments to suppliers;
d) cash payments to or on behalf of employees
e) cash payments or refund of income tax.
For further information about calculation, please turn to "http://www.prairiepublic.org/features/END/cashwrk3.htm"
Investing Activities
These are cash flow on capital expenditure incurred which will generate future operating cash flows. Examples of cash flows arising from investment activities are:
a) Cash payments to acquire property plant and equipment or cash received from disposal of these assets.
b) Cash payment to acquire equity or debt instruments of other enterprises.
c) Cash received from sale of equity or debt instrument of another enterprise.
d) Cash advances and loans made to other parties.
e) Cash received from the repayments of advances and loans made to other parties;
Financing Activities
Cash flow from financing activities relates to cash flow received from or repaid to outside providers of finance. Examples include:
a) Cash proceeds from issuing of shares or other equity instrument;
b) Cash payments to owners to acquire or redeem the enterprise shares.
c) Cash repayment of amounts borrowed.
d) Cash payments in finance lease
e) Dividend paid to ordinary share holders
Cash flow statement can be produced used direct or indirect method. Direct method discloses the major classes of cash receipts and gross payments. While indirect method begins with net profit which is adjusted with non cash transactions, accrued income or expenses and items of income or expenses associated with investing or financing activities.
