Refer to Campbell Soup Company's statement of Campbell Soup cash flows in Appendix A. Required: Convert Campbell's statement of cash flows for Year 11 to show cash flows from operations (CFO) using the direct method. For purposes of this problem only, assume the following: a. Net change in other current assets and current liabilities of $30.6 consists of: Decrease in prepaid expenses Decrease in accounts payable. Increase in taxes payable.... Increase in accruals and payrolls $125.3) 42.8 (21.3) (26.8) $(30.6) b. Campbell disposed of a division in Year 11 reporting revenues of $7.5 million and an after-tax loss of $5.3 mil- lion. The loss is included in expenses. The CFO presentation should include revenues and expenses of the discontinued operations in Year 11. Refer to Campbell Soup Company's statement of cash Campbell Soup flows in Appendix A. Required: Convert Campbell's statement of cash flows for Year 10 to report its cash from operations under the direct method. (For purposes of this assignment only, assume Campbell disposed of a division in Year 10 that had revenues of $7.5 million and an after-tax loss of $5.3 million. The loss is in- cluded in expenses. The CFO presentation should include revenues and expenses of discontinued operations in Year 10.) A colleague who is aware of your understanding of financial statements asks for help in analyzing the transactions and events of Zett Corporation. The following data are provided: ZETT CORPORATION Balance Sheets December 31, Year 1 and Year 2 Year 1 Year 2 $ 34,500 17,000 14,000 Cash. Accounts receivable, net. Inventory.. Investments (long term) Fixed assets Accumulated depreciation.. Total assets. $ 34,000 12,000 16,000 6,000 80,000 (48,000) $100,000 93,000 (39,000) $119,500 (continued) Additional Information: 1. Purchases in Year 1 are $450,000. 2. In Year 2, management expects 15% sales growth and a 10% increase in all expenses except for depreciation, which increases by 5%. 3. Inventory turnover for Year 1 is 5.0, and management expects an inventory turnover ratio of 6.0 for Year 2. 4. A receivable collection period of 90 days, based on year-end accounts receivable, is planned for Year 2. 5. Year 2 income taxes, at the same rate on pretax income in Year 1, will be paid in cash. 6. Notes payable of $20,000 will be paid in Year 2. 7. Long-term debt of $25,000 will be repaid in Year 2. 8. Kopp desires a minimum cash balance of $20,000 in Year 2. 9. The ratio of accounts payable to purchases will remain the same in Year 2 as in Year 1. Required: a. Prepare a statement of forecasted cash inflows and outflows (what-if analysis) for the year ending Decem- ber 31, Year 2 b. Will Kopp Corporation have to borrow money in Year 2? CAMPBELL SOUP COMPANY Supplemental Schedule of Sales and Earnings (million dollars) Year 11 Year 10 Year o Sales Earnings Sales Earnings Sales Earnings Contributions by division Campbell North America Campbell U.S.A. Campbell Canada $3,911.8 352.0 4,263.8 $632.7 35.3 $3,932.7 384.0 4,316.7 $370.8 25.6 $3,666.9 313.4 $242.3 23.8 668.0 396.4 3,980,3 266.1 Campbell Biscuit and Bakery Pepperidge Farm International Biscuit 369.0 219.4 73.6 17.6 382.0 1993 57.0 8.9 348.4 178.0 33.6 11.7 788.4 91.2 777.3 63.9 726.4 65.3 Campbell International 1,222.9 39.4 1,189.8 (168.6) 1,030.3 (117.8) Interdivision (71.0) (78.0) (64.9) Total sales $6,204.1 $6,205.8 $5,672.1 Total operating earnings Unallocated corporate expenses Interest, net Foreign currency translation adjustments Taxes on earnings 798.6 (41.1) (90.2) .1 (263.9) 293.7 (16.5) (94.0) (3.8) (175.0) 213.6 (31.3) (55.8) (20.0) (93.4) Net earnings $401.5 $4.4 $13.1 Net earnings per share $3.16 $.03 $.10 Refer to Campbell Soup Company's statement of Campbell Soup cash flows in Appendix A. Required: Convert Campbell's statement of cash flows for Year 11 to show cash flows from operations (CFO) using the direct method. For purposes of this problem only, assume the following: a. Net change in other current assets and current liabilities of $30.6 consists of: Decrease in prepaid expenses Decrease in accounts payable. Increase in taxes payable.... Increase in accruals and payrolls $125.3) 42.8 (21.3) (26.8) $(30.6) b. Campbell disposed of a division in Year 11 reporting revenues of $7.5 million and an after-tax loss of $5.3 mil- lion. The loss is included in expenses. The CFO presentation should include revenues and expenses of the discontinued operations in Year 11. Refer to Campbell Soup Company's statement of cash Campbell Soup flows in Appendix A. Required: Convert Campbell's statement of cash flows for Year 10 to report its cash from operations under the direct method. (For purposes of this assignment only, assume Campbell disposed of a division in Year 10 that had revenues of $7.5 million and an after-tax loss of $5.3 million. The loss is in- cluded in expenses. The CFO presentation should include revenues and expenses of discontinued operations in Year 10.) A colleague who is aware of your understanding of financial statements asks for help in analyzing the transactions and events of Zett Corporation. The following data are provided: ZETT CORPORATION Balance Sheets December 31, Year 1 and Year 2 Year 1 Year 2 $ 34,500 17,000 14,000 Cash. Accounts receivable, net. Inventory.. Investments (long term) Fixed assets Accumulated depreciation.. Total assets. $ 34,000 12,000 16,000 6,000 80,000 (48,000) $100,000 93,000 (39,000) $119,500 (continued) Additional Information: 1. Purchases in Year 1 are $450,000. 2. In Year 2, management expects 15% sales growth and a 10% increase in all expenses except for depreciation, which increases by 5%. 3. Inventory turnover for Year 1 is 5.0, and management expects an inventory turnover ratio of 6.0 for Year 2. 4. A receivable collection period of 90 days, based on year-end accounts receivable, is planned for Year 2. 5. Year 2 income taxes, at the same rate on pretax income in Year 1, will be paid in cash. 6. Notes payable of $20,000 will be paid in Year 2. 7. Long-term debt of $25,000 will be repaid in Year 2. 8. Kopp desires a minimum cash balance of $20,000 in Year 2. 9. The ratio of accounts payable to purchases will remain the same in Year 2 as in Year 1. Required: a. Prepare a statement of forecasted cash inflows and outflows (what-if analysis) for the year ending Decem- ber 31, Year 2 b. Will Kopp Corporation have to borrow money in Year 2? CAMPBELL SOUP COMPANY Supplemental Schedule of Sales and Earnings (million dollars) Year 11 Year 10 Year o Sales Earnings Sales Earnings Sales Earnings Contributions by division Campbell North America Campbell U.S.A. Campbell Canada $3,911.8 352.0 4,263.8 $632.7 35.3 $3,932.7 384.0 4,316.7 $370.8 25.6 $3,666.9 313.4 $242.3 23.8 668.0 396.4 3,980,3 266.1 Campbell Biscuit and Bakery Pepperidge Farm International Biscuit 369.0 219.4 73.6 17.6 382.0 1993 57.0 8.9 348.4 178.0 33.6 11.7 788.4 91.2 777.3 63.9 726.4 65.3 Campbell International 1,222.9 39.4 1,189.8 (168.6) 1,030.3 (117.8) Interdivision (71.0) (78.0) (64.9) Total sales $6,204.1 $6,205.8 $5,672.1 Total operating earnings Unallocated corporate expenses Interest, net Foreign currency translation adjustments Taxes on earnings 798.6 (41.1) (90.2) .1 (263.9) 293.7 (16.5) (94.0) (3.8) (175.0) 213.6 (31.3) (55.8) (20.0) (93.4) Net earnings $401.5 $4.4 $13.1 Net earnings per share $3.16 $.03 $.10