Question
The following is Aberdeen Corps (hypothetical name) comparative Statement of Financial Position as 31 st December 2020 and 2019. 2020 2019 Property, plant and equipment
The following is Aberdeen Corps (hypothetical name) comparative Statement of Financial Position as 31st December 2020 and 2019.
|
| |
2020 | 2019 | |
Property, plant and equipment | 3,900,000 | 2,200,000 |
Accumulated Depreciation | 1,700,000 | 1,100,000 |
Inventory | 10,000,000 | 8,000,000 |
Accounts Receivable | 10,600,000 | 8,800,000 |
Cash | 2,000,000 | 1,300,000 |
Total Assets | 24,800,000 | 19,200,000 |
Share Capital Ordinary, 1 par | 18,000,000 | 15,000,000 |
Retained Earnings | 2,800,000 | 1,700,000 |
Accounts Payable | 3,000,000 | 2,000,000 |
Income Tax Paybles | 1,000,000 | 500,000 |
Total Equity and Liabilities | 24,800,000 | 19,200,000 |
Additional Information:
Net income for 2020 was 4,400,000 and dividends of 3,300,000 were paid in 2020.
New equipment was purchased and none was sold.
Required:
- Prepare a Statement of Cash Flows for 2020 for the company. Show all of your workings.
- Compute the current ratio (current assets current liabilities) as of 1st January 2019, and 31st December 2020 and comment on Aberdeen Corps liquidity and financial flexibility.
- Discuss the indictors of cash flow quality and explain why the operating cash flow is the cash flow that is generally most important for assessing a companys performance and valuing a company or its securities.
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