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    Activity 1

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    Lezi Woo
    The document contains financial statements for a company in 2019 and 2018, including a balance sheet, income statement, and cash flow statement. It shows that in 2019, the company's assets increased to over $3 million from $2 million in 2018. Sales and expenses also increased substantially from 2018 to 2019. The cash flow statement indicates the company had a net cash decrease of $12,000 in 2019 from operating activities but obtained $762,000 from financing activities, resulting in a $200,000 increase in cash.

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    Activity 1

    Uploaded by

    Lezi Woo
    68 views4 pages
    The document contains financial statements for a company in 2019 and 2018, including a balance sheet, income statement, and cash flow statement. It shows that in 2019, the company's assets increased to over $3 million from $2 million in 2018. Sales and expenses also increased substantially from 2018 to 2019. The cash flow statement indicates the company had a net cash decrease of $12,000 in 2019 from operating activities but obtained $762,000 from financing activities, resulting in a $200,000 increase in cash.

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    ACTIVITY 1

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    The document contains financial statements for a company in 2019 and 2018, including a balance sheet, income statement, and cash flow statement. It shows that in 2019, the company's assets increased to over $3 million from $2 million in 2018. Sales and expenses also increased substantially from 2018 to 2019. The cash flow statement indicates the company had a net cash decrease of $12,000 in 2019 from operating activities but obtained $762,000 from financing activities, resulting in a $200,000 increase in cash.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    68 views4 pages

    Activity 1

    Uploaded by

    Lezi Woo
    The document contains financial statements for a company in 2019 and 2018, including a balance sheet, income statement, and cash flow statement. It shows that in 2019, the company's assets increased to over $3 million from $2 million in 2018. Sales and expenses also increased substantially from 2018 to 2019. The cash flow statement indicates the company had a net cash decrease of $12,000 in 2019 from operating activities but obtained $762,000 from financing activities, resulting in a $200,000 increase in cash.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    ACTIVITY 1 FINANCIAL MANAGEMENT MBA 2

    2019 2018
    Cash 350,000 150,000
    Accounts Receivable 840,000 580,000
    Merchandise Inventory 660,000 420,000
    Prepaid Expenses 50,000 100,000
    Long term Investment 220,000 200,000
    Property, Plant and Equipment 1,130,000 600,000
    Accumulated Depreciation 110,000 50,000
    Accounts Payable 530,000 440,000
    Interest Payable 140,000 100,000
    Accrued Expenses 140,000 130,000
    Dividends Payable 70,000 0
    Notes Payable - Long term 500,000 0
    Share Capital 1,200,000 900,000
    Retained Earnings (year-end) 560,000 430,000
    Sales 6,400,000 4,000,000
    Cost of Goods Sold 5,000,000 3,200,000
    Operating Expenses 1,000,000 520,000
    Interest Expense 60,000 0
    Income Before Tax 340,000 280,000
    Income Tax (30%) 102,000 84,000
    Net Income 238,000 196,000

    Comparative Balance Sheet


    Change
    2019 2018 increase/
    (decrease)
    Assets
    Cash 350,000 150,000 200,000
    Accounts Receivable 840,000 580,000 260,000
    Merchandise Inventory 660,000 420,000 240,000
    Prepaid Expenses 50,000 100,000 (50,000)
    Long Term Investment 220,000 200,000 20,000
    Property, Plant and Equipment 1,130,000 600,000 530,000
    Accumulated Depreciation (110,000) (50,000) (60,000)
    Total Assets 3,140,000 2,000,000 1,140,000
    Liabilities and Equity
    Liabilities:
    Accounts Payable 530,000 440,000 90,000
    Interest Payable 140,000 100,000 40,000
    Accrued Expenses 140,000 130,000 10,000
    Dividends Payable 70,000 0 70,000
    Notes Payable - Long term 500,000 0 500,000
    Total Liabilities 1,380,000 670,000 710,000
    Equity:
    Share Capital 1,200,000 900,000 300,000
    Retained Earnings (year-end) 560,000 430,000 130,000
    Total Equity 1,760,000 1,330,000 430,000
    Total Liabilities and Equity 3,140,000 2,000,000 1,140,000

    Income Statement
    2019 2018
    Sales 6,400,000 4,000,000
    Cost of Goods Sold 5,000,000 3,200,000
    Gross 1,400,000 800,000
    Operating Expenses 1,000,000 520,000
    Interest Expense 60,000 0
    Total Expense 1,060,000 520,000
    Gross – Total Expense 340,000 280,000
    Income Before Tax 340,000 280,000
    Income Tax (30%) 102,000 84,000
    Net Income 238,000 196,000

    Part 1. CASH FLOW STATEMENT FOR 2019, INDIRECT METHOD

    CASH FLOW STATEMENT FOR 2019


    CASH FLOW FROM OPERATING ACTIVITIES
    Net Income Before Tax 340,000
    Adjustments:
    Depreciation 60,000
    Interest Expense 60,000
    Operating income before working capital change 460,000
    (260,000
    Increase in accounts receivable )
    (240,000
    Increase in MI )
    Decrease in prepayments 50,000
    Increase in accounts payable 90,000
    Increase in A/E 10,000
    110,000
    Interest Paid (20,000)
    (102,000
    Income Taxes Paid )
    Net Cash used in operating activities (12,000)
    CASH FLOW FROM INVESTING ACTIVITIES
    Purchase of Additional Investment (20,000)
    (530,000
    Purchase of Additional PPE )
    (550,000
    Net Cash used in investing activities )
    CASH FLOW FROM FINANCING ACTIVITIES
    Proceeds from notes payable 500,000
    Dividends paid (38,000)
    Proceeds from issuance of share capital 300,000
    Net cash from financing activities 762,000
    Net Increase in cash during the year 200,000
    Cash, Beginning 150,000
    Cash, Ending 350,000

    Part 2. PERFORMANCE MEASURES FINANCIAL STATEMENTS


    1. WORKING CAPITAL (WC)
    WC = Current Assets

    CURRENTS ASSETS:
    Cash 350,000
    Accounts Receivables 840,000
    Merchandise Inventory 660,000
    Prepaid Expenses 50,000
    Total Current Assets 1,900,000
    2. NET WORKING CAPITAL (NWC)
    NWC = Current Assets – Current Liabilities

    CURRENTS ASSETS:
    Cash 350,000
    Accounts Receivables 840,000
    Merchandise Inventory 660,000
    Prepaid Expenses 50,000 1,900,000
    CURRENT LIABILITIES:
    Accounts Payable 530,000
    Interest Payable 140,000
    Accrued Expenses 140,000
    Dividends Payable 70,000 880,000
    NET WORKING CAPITAL 1,020,000

    3. NET OPERATING WORKING CAPITAL (NOWC)


    NOWC = Current Assets - Non-Interest-Bearing Current Liabilities

    CURRENTS ASSETS:
    Cash 350,000
    Accounts Receivables 840,000
    Merchandise Inventory 660,000
    Prepaid Expenses 50,000 1,900,000
    NON-INTEREST-BEARING CURRENT LIABILITIES:
    Accounts Payable 530,000
    Accrued Expenses 140,000 670,000
    NET OPERTATING WORKING CAPITAL 1,230,000

    4. OPERATING CAPITAL (OC)


    OC = NOWC + Net Fixed Assets

    CURRENTS ASSETS:
    Cash 350,000
    Accounts Receivables 840,000
    Merchandise Inventory 660,000
    Prepaid Expenses 50,000 1,900,000
    NON-INTEREST-BEARING CURRENT LIABILITIES:
    Accounts Payable 530,000
    Accrued Expenses 140,000 670,000
    NET OPERTATING WORKING CAPITAL 1,230,000
    FIXED ASSETS:
    Long-term Investment 220,000
    Property, Plant and Equipment 1,130,000 1,350,000
    OPERATING CAPITAL 2,580,000

    5. NET OPERATING PROFIT AFTER TAX (NOPAT)


    NOPAT = EBIT (1 - Tax Rate)
    = 340,000 (1 - 30%)
    = 340,000(0.7)
    = 238,000

    6. NET CASH FLOW (NCF)


    NCF = Net Income + Depreciation & Amortization
    = 238,000 + 110,000
    = 348,000

    7. OPERATING CASH FLOW (OCF)


    OCF = NOPAT + Depreciation & Amortization
    = 238,000 + 110,000
    = 348,000

    8. FREE CASH FLOW (FCF)


    FCF = OCF - (Capital Expenditure + NOWC)

    OPERTATING CASH FLOW 348,000


    CAPITAL EXPENDITURE
    Long-term Investment 220,000
    Property, Plant and Equipment 1,130,000 1,350,000
    NET WORKING CAPITAL
    CURRENTS ASSETS:
    Cash 350,000
    Accounts Receivables 840,000
    Merchandise Inventory 660,000
    Prepaid Expenses 50,000 1,900,000
    NON-INTEREST-BEARING CURRENT
    LIABILITIES:
    Accounts Payable 530,000
    Accrued Expenses 140,000 670,000 1,230,000 2,580,000
    FREE CASH FLOW (2,232,000)

    --END--

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