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LISTEN $. 4,340 $ 14,400 (4,800) 4,500 (700) (2,500) (1,800) 400 9,500 13,840 GBANG JASON Statement of Cash Flows Indirect Method For the Year Ended December 31, 2018 Cash Flow from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities: Depreciation Gain on Sale of Plant Assets Accounts Recelvable decrease Prepaid Insurance increase Inventory increase Accounts Payable decrease Salaries Payable increase Net Cash Flow: Operating Activities Cash Flow from Investing Activities: Proceeds from Sale of Land Cost of New Plant Assets (Equipment) Net Cash Flow: Investing Activities Cash Flow from Financing Activities: Payment of Notes Payable (principal) Issuance of Common Stock Payment of Dividends Net Cash Flow: Financing Activities Total Cash Flow increase/(decrease) Cash Balance, December 31, 2017 Cash Balance, December 31, 2018 14,800 (40,000) (25,200) (10,000) 45,000 (440) 34,560 23,200 24,300 $ 47,500 Noncash Investing and Financing Activities Land Acquired in Exchange for Note Payable $ 20,000 Additional Information: 1. Propensity Company sold land with an original cost of $10,000, for $14,800 cash. 2. A new parcel of land was purchased for $20,000, in exchange for a note payable. 3. Plant assets were purchased for $40,000 cash. 4. Propensity declared and paid a $440 cash dividend to shareholders. 5. Propensity issued common stock in exchange for $45,000 cash. Prepare the Operating Activities Section of the Statement of Cash Flows Using the Indire Method You have been hired as an analyst for Mellon Bank and your team is working on an independent assessment of Daffy Duck Food Inc. (DDF Inc.) DDF Inc. is a firm that specializes in the production of freshly imported farm products from France. Your assistant has provided you with the following data for Flipper Inc and their industry. Ratio 1999 1998 1997 Long-term debt Inventory Turnover Depreciation/Total Assets Days' sales in receivables Debt to Equity Profit Margin Total Asset Turnover Quick Ratio Current Ratio Times Interest Earned Equity Multiplier 0.45 62.65 0.25 113 0.75 0.082 0.54 1028 1.33 0.9 1.75 0.40 42.42 0.014 98 0.85 0.07 0.65 1.03 1.21 4.375 1.85 0.35 32.25 0.018 94 0.90 0.06 0.70 1.029 1.15 4.45 1.90 1999- Industry Average 0.35 53.25 0.015 130.25 0.88 0.075 0.40 1.031 1.25 4.65 1.88 a. In the annual report to the shareholders, the CEO of Flipper Inc wrote, 1997 was a good year for the firm with respect to our ability to meet our short-term obligations. We had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short-term marketable securities). Is the CEO correct? Explain and use only relevant information in your analysis. b. What can you say about the firm's asset management? Be as complete as possible given the above information, but do not use any irrelevant information. Vc. You are asked to provide the shareholders with an assessment of the firm's solvency and leverage. Be as complete as possible given the above information, but do not use any irrelevant information. LISTEN $. 4,340 $ 14,400 (4,800) 4,500 (700) (2,500) (1,800) 400 9,500 13,840 GBANG JASON Statement of Cash Flows Indirect Method For the Year Ended December 31, 2018 Cash Flow from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities: Depreciation Gain on Sale of Plant Assets Accounts Recelvable decrease Prepaid Insurance increase Inventory increase Accounts Payable decrease Salaries Payable increase Net Cash Flow: Operating Activities Cash Flow from Investing Activities: Proceeds from Sale of Land Cost of New Plant Assets (Equipment) Net Cash Flow: Investing Activities Cash Flow from Financing Activities: Payment of Notes Payable (principal) Issuance of Common Stock Payment of Dividends Net Cash Flow: Financing Activities Total Cash Flow increase/(decrease) Cash Balance, December 31, 2017 Cash Balance, December 31, 2018 14,800 (40,000) (25,200) (10,000) 45,000 (440) 34,560 23,200 24,300 $ 47,500 Noncash Investing and Financing Activities Land Acquired in Exchange for Note Payable $ 20,000 Additional Information: 1. Propensity Company sold land with an original cost of $10,000, for $14,800 cash. 2. A new parcel of land was purchased for $20,000, in exchange for a note payable. 3. Plant assets were purchased for $40,000 cash. 4. Propensity declared and paid a $440 cash dividend to shareholders. 5. Propensity issued common stock in exchange for $45,000 cash. Prepare the Operating Activities Section of the Statement of Cash Flows Using the Indire Method You have been hired as an analyst for Mellon Bank and your team is working on an independent assessment of Daffy Duck Food Inc. (DDF Inc.) DDF Inc. is a firm that specializes in the production of freshly imported farm products from France. Your assistant has provided you with the following data for Flipper Inc and their industry. Ratio 1999 1998 1997 Long-term debt Inventory Turnover Depreciation/Total Assets Days' sales in receivables Debt to Equity Profit Margin Total Asset Turnover Quick Ratio Current Ratio Times Interest Earned Equity Multiplier 0.45 62.65 0.25 113 0.75 0.082 0.54 1028 1.33 0.9 1.75 0.40 42.42 0.014 98 0.85 0.07 0.65 1.03 1.21 4.375 1.85 0.35 32.25 0.018 94 0.90 0.06 0.70 1.029 1.15 4.45 1.90 1999- Industry Average 0.35 53.25 0.015 130.25 0.88 0.075 0.40 1.031 1.25 4.65 1.88 a. In the annual report to the shareholders, the CEO of Flipper Inc wrote, 1997 was a good year for the firm with respect to our ability to meet our short-term obligations. We had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short-term marketable securities). Is the CEO correct? Explain and use only relevant information in your analysis. b. What can you say about the firm's asset management? Be as complete as possible given the above information, but do not use any irrelevant information. Vc. You are asked to provide the shareholders with an assessment of the firm's solvency and leverage. Be as complete as possible given the above information, but do not use any irrelevant information