QUESTIONS

1. What was the company s free cash flow in 2021?

2. What were the major sources of cash from financing activities during 2021? Did the net

   effect of financing activities result in an increase or a decrease in cash during the year?

3. What happened to the total amount of cash and cash equivalents during the year?

   Assuming 2021 was a typical year, is the firm in a position to continue its dividend

   payments in the future? Explain

4. Look at the reconciliation of net income to net cash provided by operating activities, and

   explain the following:

   1. Net loss (gain) from the sale of marketable securities

   2. Increase in accounts receivable

SUBJECT : ACCOUNTING

C E F G H M N D Net income 0 35 714 Add: Depreciation expense Decrease in inventory Increase in accounts payable Subtotal 8 571 714 1429 10 714 Less: Increase in accounts receivable Decrease in accrued expenses payable Gain on sales of marketable securities Subtotal 1429 2 143 2 857 6 429 Net cash provided by operating activities 40 000 Cash flows from INVESTING ACTIVITIES Proceeds from sales of marketable securities Cash paid to acquireplant assets (see more explanation below **) 5 000 -4 286 ** 714 Net cash provided by investing activities Cash flows from FINANCING ACTIVITIES Dividends paid Payments to retire bonds payable -20 000 -21 429 Net cash used for financing activities 41 429 -714 NET DECREASE IN CASH Cash and equivalents January 1, 2021 Cash and equivalents December 31, 2021 7 143 6 429 ** Suplementary schedule Purchases of plant assets Less portion financed through issuance of long term debt Cash paid to acquire plant assets 14 286 10 000 4 286 **