For each of the following transactions:
indicate whether it will result in an increase (+), decrease (â), or have no effect (NE) on cash flows;
classify each of the transactions as an operating (O), investing (I), financing (F), or significant noncash investing / financing (NC) activity or no effect (NE)
Impact
(+), (â) or (NE)
Classification
(O), (I), (F),
(NC) or (NE)
Repayment of mortgage payable
Payment of interest on mortgage
Purchase of land in exchange for common shares
Issue of preferred shares for cash
Collection of accounts receivable
Declaration of cash dividend
Payment of cash dividend
Cash purchase of inventory
Selected information (CAD millions) are presented for two firms ROP and DUL, operating in the same industries:
DUL
ROH
Net income
$ 4,529
$ 161
Net cash provided by operating activities
6,539
212
Net cash provided (used) by investing activities
(1,420)
35
Net cash provided (used) by financing activities
735
(176)
Net increase in cash and cash equivalents
$ 5,854
$ 71
Cash and cash equivalents, beginning of year
$ 2,078
$ 267
Cash and cash equivalents, end of year
$ 7,932
$ 338
Required:
i) Compare and discuss the performance / activity the two companies based on the above Cash Flow and Net Income information.
ii) Which company appears to be in a stronger Cash position? Why?
For each of the following transactions:
indicate whether it will result in an increase (+), decrease (â), or have no effect (NE) on cash flows;
classify each of the transactions as an operating (O), investing (I), financing (F), or significant noncash investing / financing (NC) activity or no effect (NE)
| Impact (+), (â) or (NE) | Classification (O), (I), (F), (NC) or (NE) | |
| Repayment of mortgage payable | ||
| Payment of interest on mortgage | ||
| Purchase of land in exchange for common shares | ||
| Issue of preferred shares for cash | ||
| Collection of accounts receivable | ||
| Declaration of cash dividend | ||
| Payment of cash dividend | ||
| Cash purchase of inventory |
Selected information (CAD millions) are presented for two firms ROP and DUL, operating in the same industries:
| DUL | ROH | |
| Net income | $ 4,529 | $ 161 |
| Net cash provided by operating activities | 6,539 | 212 |
| Net cash provided (used) by investing activities | (1,420) | 35 |
| Net cash provided (used) by financing activities | 735 | (176) |
| Net increase in cash and cash equivalents | $ 5,854 | $ 71 |
| Cash and cash equivalents, beginning of year | $ 2,078 | $ 267 |
| Cash and cash equivalents, end of year | $ 7,932 | $ 338 |
Required:
i) Compare and discuss the performance / activity the two companies based on the above Cash Flow and Net Income information.
ii) Which company appears to be in a stronger Cash position? Why?
Related questions
Selected information (CAD millions) are presented for two firms ROP and DUL, operating in the same industries:
| DUL | ROH | |
| Net income | $ 4,529 | $ 161 |
| Net cash provided by operating activities | 6,539 | 212 |
| Net cash provided (used) by investing activities | (1,420) | 35 |
| Net cash provided (used) by financing activities | 735 | (176) |
| Net increase in cash and cash equivalents | $ 5,854 | $ 71 |
| Cash and cash equivalents, beginning of year | $ 2,078 | $ 267 |
| Cash and cash equivalents, end of year | $ 7,932 | $ 338 |
Required:
i) Compare and discuss the performance / activity the two companies based on the above Cash Flow and Net Income information.
ii) Which company appears to be in a stronger Cash position? Why?
1. Fill in the table by indicating if it is an increasing (+) or decreasing (-) transaction. Also indicate if it is an operating (O), investing (I), or financing (F), activity. + or - O, I, or F
| Cash payment of dividends | 2,000 | ||
| Cash payment for inventory | 120,650 | ||
| Cash payment for expenses | 61,000 | ||
| Cash payment for wages | 45,250 | ||
| Cash payment for interest expense | 925 | ||
| Cash payment for purchase of equipment | 25,350 | ||
| Cash payment for repayment of debt | 14,000 | ||
| Cash collection of accounts receivable | 340,500 | ||
| Cash collection of interest revenue | 12,500 | ||
| Cash collection of dividend revenue | 10,500 | ||
| Cash proceeds from sale of equipment | 12,000 | ||
| Cash proceeds from sale of common stock | 55,000 |
2. Using the information in the table from question 1, complete the following statement of cash flows using the direct method. List each transaction and amount under the appropriate section. Be sure to indicate if it is increasing or decreasing (+ or -). You may not need to use all of the lines.
| Cash from Operating Activity | Amount |
| Net cash __ (provided or used) by operating activity | |
| Cash from Investing activity | Amount |
| Net cash _____ (provided or used) by investing activity | |
| Cash from Financing Activity | Amount |
| Net cash __ (provided or used) by financing activity |
Net change in cash during period
Cash at beginning of period 27,000
Cash at end of period
