2-6 Statement of Retained Earnings(2001) Balance of retained earnings, 12/31/00 $203768 Add: Net income, 2001(519, 936) Less: Dividends paid (11000 Balance of retained earnings, 12/31/01 ($327168) Copy right C 2002 by Harcourt, Inc. All rights reserved
2 - 6 Copyright © 2002 by Harcourt, Inc. All rights reserved. Statement of Retained Earnings (2001) Balance of retained earnings, 12/31/00 $203,768 Add: Net income, 2001 (519,936) Less: Dividends paid (11,000) Balance of retained earnings, 12/31/01 ($327,168)
2-7 Statement of cash Flows: 2001 OPERATING ACTIVITIES Net income (519,936) Adjustments Depreciation 116,960 Change in AR (280,960) Change in inventories (572,160) Change in AP 378560 Change in accruals 353600 Net cash provided by ops. (523, 936) Copy right C 2002 by Harcourt, Inc. All rights reserved
2 - 7 Copyright © 2002 by Harcourt, Inc. All rights reserved. Statement of Cash Flows: 2001 OPERATING ACTIVITIES Net Income (519,936) Adjustments: Depreciation 116,960 Change in AR (280,960) Change in inventories (572,160) Change in AP 378,560 Change in accruals 353,600 Net cash provided by ops. (523,936)
2-8 L-T INVESTING ACTIVITIES Investments in fixed assets (711,950) FINANCING ACTIVITIES Change in s-t investments 48.600 Change in notes payable 520,000 Change in long-term debt 676, 568 Payment of cash dividends (11,000 Net cash from financing 1,234,168 Sum: net change in cash 1718 Plus: cash at beginning of year 9,000 Cos 2 a eand nt y Harcourt year 28 All rights reserved
2 - 8 Copyright © 2002 by Harcourt, Inc. All rights reserved. L-T INVESTING ACTIVITIES Investments in fixed assets (711,950) FINANCING ACTIVITIES Change in s-t investments 48,600 Change in notes payable 520,000 Change in long-term debt 676,568 Payment of cash dividends (11,000) Net cash from financing 1,234,168 Sum: net change in cash (1,718) Plus: cash at beginning of year 9,000 Cash at end of year 7,282
2-9 What can you conclude about the company's financial condition from its statement of cash flows? Net cash from operations=-$523, 936, mainly because of negative net income The firm borrowed $1, 185, 568 and sold $48, 600 in short-term investments to meet its cash requirements Even after borrowing, the cash account fell by $1, 718. Copy right C 2002 by Harcourt, Inc. All rights reserved
2 - 9 Copyright © 2002 by Harcourt, Inc. All rights reserved. ◼Net cash from operations = -$523,936, mainly because of negative net income. ◼The firm borrowed $1,185,568 and sold $48,600 in short-term investments to meet its cash requirements. ◼Even after borrowing, the cash account fell by $1,718. What can you conclude about the company’s financial condition from its statement of cash flows?
2-10 What effect did the expansion have on net operating working capital(NOWC)? NOWC Operating Operating CA CL NOWCo1=($7,282+$632,160+51,287360) ($524,160+$489,600) =$913,042 NOWC00=$793,800 Copy right C 2002 by Harcourt, Inc. All rights reserved
2 - 10 Copyright © 2002 by Harcourt, Inc. All rights reserved. What effect did the expansion have on net operating working capital (NOWC)? NOWC01 = ($7,282 + $632,160 + $1,287,360) - ($524,160 + $489,600) = $913,042. NOWC00 = $793,800. = - Operating CA Operating CL NOWC