Chapter 6 – Statement of Cash Flows
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Analysis of Cash Flow Ratios: a Study on CMC
Accounting 4 (2018) 41–52 Contents lists available at GrowingScience Accounting homepage: www.GrowingScience.com/ac/ac.html Analysis of cash flow ratios: A study on CMC Somnath Dasa* aAssistant Professor of Commerce, Rabindra Mahavidyalaya, Champadanga, Hooghly – 712401, India C H R O N I C L E A B S T R A C T Article history: Cash flow ratios help financial users get relevant information about financial resources for a Received January 9, 2017 given time. Cash flow ratios are now used more than the traditional ones because it is more Received in revised format effective and justified. Cash flow based ratios are especially surprising because they do not January 11 2017 only play a significant role in the credit rating of evaluation, but also forecast the failure of a Accepted March 7 2017 Available online corporation. In this study, we perform an empirical investigation on a company named CMC. March 7 2017 From the study, it is clear that the liquidity and solvency positions of the company were moderate whereas the company maintained low profitability. On the other hand, the efficiency Keywords: Liquidity and sufficiency ratios of the study give us a new look on financial judgement. Solvency Profitability Efficiency Sufficiency Ratios © 2017 Growing Science Ltd. All rights reserved. 1. Introduction Information related to cash flow helps financial statement users receive the relevant information concerning the use and source of financial resources over a given time period (Rose et al., 2007). Cash flow statement contains information associated with operating, investing purposes of financial analysis, because the effect of the traditional ratio analysis techniques has been well established in literature, and financial activities (Macve, 1997). -
The Wine Industry Audit Technique Guide
The Wine Industry Audit Technique Guide NOTE: This document is not an official pronouncement of the law or the position of the Service and cannot be used, cited, or relied upon as such. This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date. Publication Date: March 2011 Table of Contents Introduction .............................................................................................................................................. 2 Chapter 1 - Overview of Winery/Vineyard Operations ............................................................................ 3 Farming ................................................................................................................................................. 3 Winery (Manufacturing) ....................................................................................................................... 4 Marketing/Sales .................................................................................................................................... 6 Chapter 2 - Pre-Audit Information Gathering ........................................................................................... 8 Information Sources .............................................................................................................................. 8 Chapter 3 - Audit Considerations ............................................................................................................. -
Capital/Fixed Assets Depreciation Schedule Updated: February 2021
Kentucky Department of Education Munis Guide Capital/Fixed Assets Depreciation Schedule Updated: February 2021 Capital/Fixed Assets Depreciation Schedule Office of Education Technology: Division of School Technology Services Questions?: [email protected] 1 | P a g e Kentucky Department of Education Munis Guide Capital/Fixed Assets Depreciation Schedule Updated: February 2021 OVERVIEW The Fixed Assets Depreciation Schedule provides a listing of asset details that were depreciated for the report year as posted from the Fixed Asset module for the report year. Asset descriptions and depreciation details are included such as estimated life, number of periods taken for the year, first and last year periods of depreciation and acquisition cost; all to assist auditors in verifying the depreciation calculation and amounts. The report also includes assets that have been fully depreciated but have a balance remaining of Life-To-Date accumulated depreciation for the reported year. The asset amounts are reported as posted from the Fixed Asset history detail records generated from the Fixed Asset module and does NOT include amounts generated from General Journal Entries. The Depreciation Schedule pulls from two different Fixed Asset sources: 1. Fixed Asset Master File Maintenance 2. Fixed Asset history records The Fixed Asset Master File Maintenance or Asset Inquiry is where the actual asset master records reside; where assets are added and maintained. Key fields and amounts such as the asset Acquisition cost field, Asset Type (Governmental or Proprietary), Class and Sub-class codes are pulled from the asset master file for the Depreciation Schedule. It is vital that these key fields are accurate and tie to the fixed asset history records. -
Chapter 3 CT 1. A. If Inventory Is Purchased with Cash, Then There Is
Chapter 3 CT 1. a. If inventory is purchased with cash, then there is no change in the current ratio. If inventory is purchased on credit, then there is a decrease in the current ratio if it was initially greater than 1.0. b. Reducing accounts payable with cash increases the current ratio if it was initially greater than 1.0. c. Reducing short-term debt with cash increases the current ratio if it was initially greater than 1.0. d. As long-term debt approaches maturity, the principal repayment and the remaining interest expense become current liabilities. Thus, if debt is paid off with cash, the current ratio increases if it was initially greater than 1.0. If the debt has not yet become a current liability, then paying it off will reduce the current ratio since current liabilities are not affected. e. Reduction of accounts receivables and an increase in cash leaves the current ratio unchanged. f. Inventory sold at cost reduces inventory and raises cash, so the current ratio is unchanged. g. Inventory sold for a profit raises cash in excess of the inventory recorded at cost, so the current ratio increases. 3. A current ratio of 0.50 means that the firm has twice as much in current liabilities as it does in current assets; the firm potentially has poor liquidity. If pressed by its short-term creditors and suppliers for immediate payment, the firm might have a difficult time meeting its obligations. A current ratio of 1.50 means the firm has 50% more current assets than it does current liabilities. -
Webinar Small Business Playbook for Effective Cash Flow Forecasting Pretty Books Learning Lab 2 03/2020
Webinar Small Business Playbook for Effective Cash Flow Forecasting Pretty Books Learning Lab 2 03/2020 Learning Lab Playbook // Cash flow management is vital to all companies, big or small. Establishing good Small Business cash flow forecasting practices provides you with clarity into your money and lets Playbook for Effective you stay ahead of the game. In this learning lab, you will learn the playbook for Cash Flow Forecasting managing cash flow forecasting. Pretty Books Before we begin. 3 03/2020 • Presentation is about 10 minutes. • Email questions after the webinar to: [email protected] • Free 30-Min Office Hour available . • Presentation will be emailed to you. • Cash Flow tool kit is available for download on the resources page of our website. Pretty Books Agenda 4 03/2020 Introduction The Financial ‘Fog‘? The Playbook Summary Questions & Answers Pretty Books Cash flow amidst uncertainty. 5 03/2020 01 How much money do I have? You are required to look Where did my money go? ahead to make decisions 02 now, however, looking out is not so easy. There are 03 How much money do I need? always more questions. Nothing is definite. 04 How long will my money last? Pretty Books Clear the fog! Know your numbers. 6 03/2020 Clear the fog! Know your numbers, get clear with your financials. // Clear the fog! Clearing the ‘fog‘ is something every business does, big or small, crisis or not. This is because the interplay of profit, cash in bank and investment is dynamic. Your goal is to clear out as much of this ‘fog‘ as possible, letting you plan better and make more informed decisions. -
Cost of Goods Sold
Cost of Goods Sold Inventory •Items purchased for the purpose of being sold to customers. The cost of the items purchased but not yet sold is reported in the resale inventory account or central storeroom inventory account. Inventory is reported as a current asset on the balance sheet. Inventory is a significant asset that needs to be monitored closely. Too much inventory can result in cash flow problems, additional expenses and losses if the items become obsolete. Too little inventory can result in lost sales and lost customers. Inventory is reported on the balance sheet at the amount paid to obtain (purchase) the items, not at its selling price. Cost of Goods Sold • Inventory management Involves regulation of the size of the investment in goods on hand, the types of goods carried in stock, and turnover rates. The investment in inventory should be kept at a minimum consistent with maintenance of adequate stocks of proper quality to meet sales demand. Increases or decreases in the inventory investment must be tested against the effect on profits and working capital. Standard levels of inventory should be established as adequate for a given volume of business, and stock control procedures applied so as to limit purchase as required. Such controls should not preclude volume purchase of nonperishable items when price advantages may be obtained under unusual circumstances. The rate of inventory turnover is a valuable test of merchandising efficiency and should be computed monthly Cost of Goods Sold • Inventory management All inventories are valued at cost which is defined as invoice price plus freight charges less discounts. -
14. Calculating Total Cash Flows
Chapter 2 Lecture Problems 14. Calculating Total Cash Flows. Greene Co. shows the following information on its 2008 income statement: Sales = $138,000 Costs = $71,500 Other expenses = $4,100 Depreciation expense = $10,100 Interest expense = $7,900 Taxes = $17,760 Dividends = $5,400. In addition, you're told that the firm issued $2,500 in new equity during 2008, and redeemed $3,800 in outstanding long-term debt. a. What is the 2008 operating cash flow? b. What is the 2008 cash flow to creditors? c. What is the 2008 cash flow to stockholders? d. If net fixed assets increased by $17,400 during the year, what was the addition to NWC? a. To calculate the OCF, we first need to construct an income statement. The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to get taxable income, and then subtract taxes to arrive at net income. Doing so, we get: Income Statement Sales $138,000 Costs 71,500 Other Expenses 4,100 Depreciation 10,100 EBIT $52,300 Interest 7,900 Taxable income $44,400 Taxes 17,760 Net income $26,640 Dividends $5,400 Addition to retained earnings 21,240 Page 1 Chapter 2 Lecture Problems Dividends paid plus addition to retained earnings must equal net income, so: Net income = Dividends + Addition to retained earnings Addition to retained earnings = $26,640 – 5,400 Addition to retained earnings = $21,240 So, the operating cash flow is: OCF = EBIT + Depreciation – Taxes OCF = $52,300 + 10,100 – 17,760 OCF = $44,640 b. -
Preparing a Short-Term Cash Flow Forecast
Preparing a short-term What is a short-term cash How does a short-term cash flow forecast and why is it flow forecast differ from a cash flow forecast important? budget or business plan? 27 April 2020 The COVID-19 crisis has brought the importance of cash flow A short-term cash flow forecast is a forecast of the The income statement or profit and loss account forecasting and management into sharp focus for businesses. cash you have, the cash you expect to receive and in a budget or business plan includes non-cash the cash you expect to pay out of your business over accounting items such as depreciation and accruals This document explores the importance of forecasting, explains a certain period, typically 13 weeks. Fundamentally, for various expenses. The forecast cash flow how it differs from a budget or business plan and offers it’s about having good enough information to give statement contained in these plans is derived from practical tips for preparing a short-term cash flow forecast. you time and money to make the right business the forecast income statement and balance sheet decisions. on an indirect basis and shows the broad categories You can also access this information in podcast form here. of where cash is generated and where cash is spent. Forecasts are important because: They are produced on a monthly or quarterly basis. • They provide visibility of your future cash position In contrast, a short-term cash flow forecast: and highlight if and when your cash position is going to be tight. -
Inventories and Cost of Goods Sold
Chapter 6 Inventories and Cost of Goods Sold Key Concepts: n Why should every manager be informed and concerned about inventory? n Are the inventory figures on all companies' balance sheets calculated the same way? n How does a company select its inventory costing method? n How does inventory affect cash flow? Harcourt, Inc. 6-1 FINANCIAL ACCOUNTING INSTRUCTOR’S MANUAL Chapter Outline LO 1 The Nature of Inventory Inventory is an asset held for resale rather than use, and takes different forms: n Retailer has single inventory, merchandise inventory (Exhibit 6-1) · cost is purchase price n Manufacturer has more than one form of inventory, depending on stage of development (Exhibit 6-1) · raw materials: purchased items that have not yet entered the manufacturing process · work in process: unfinished units of the company's product ¨ direct materials: used to make product ¨ direct labor: paid to workers who make the product from raw materials ¨ manufacturing overhead: manufacturing costs that cannot be directly traced to a specific unit of product · finished goods: product ready for sale LO 2 Inventory Valuation and the Measurement of Income Inventory—an asset (unexpired cost) —becomes cost of goods sold—an expense (expired cost): Beginning inventory + Purchases = Goods available for sale – Ending inventory = Cost of goods sold Error in end inventory figure will give incorrect cost of goods sold, and thus incorrect income. Cost of inventory includes all costs incurred in bringing the inventory to its existing condition and location n Purchase price less discounts n Transportation in n Insurance in transit n Taxes n Storage n Apply cost/benefit test to determine which items to add to cost LO 3 Inventory Costing Methods with a Periodic System Inventory is purchased at different times, and at different prices; these costs must be allocated correctly when items are sold. -
Absorption Costing - Overview
Absorption Costing - Overview 1. Overview of Absorption costing and Variable Costing 2. Review how costs for Manufacturing are transferred to the product 3. Job Order Vs. Process Costing 4. Overhead Application - Under applied Overhead - Over applied overhead 5. Problems with Absorption Costing 6. Concluding Comments Absorption Costing The focus of this class is on how to allocate manufacturing costs to the product. - Direct Materials - Direct Labor - Overhead Absorption costing is a process of tracing the variable costs of production and the fixed costs of production to the product. Variable Costing traces only the variable costs of production to the product and the fixed costs of production are treated as period expenses. Absorption Costing There are three different types of Absorption Costing Systems: - Job Order Costing - Process Costing - ABC Costing In Job Order Costing costs are assigned to the product in Batches or lots. - Printing - Furniture manufacturing - Bicycle Manufacturing In Process Costing, costs are systematically assigned to the product, since there are no discreet batches to assign costs. - Oil Distilling - Soda Manufacturing ABC Costing assigns cost from cost centers to the product - Best in a multi product firm, where there are different volumes Absorption Costing A simplified view of Production: Introduce Raw Manufacture Store finished Sell Finished Materials Product goods Goods 1. Direct materials 1. Direct labor 1. Production process are purchased applied to completed 2. Direct materials product 2. Goods are shipped are placed into 2. Overhead costs for sale production are incurred Absorption Costing How do we account for the production process? 1. Direct materials are purchased and recorded as an asset. -
SWOSU Business Affairs Capital Asset Inventory Review
SWOSU Business Affairs Capital Asset Inventory Review Scope and Objectives The scope of the inventory review includes all equipment purchased, owned, leased, or on loan to the university; regardless of the location of the equipment. The object is to maintain accurate records regarding cost, location, and disposition of the inventory. The objects are to: Assure all capital assets are properly located. Assure all capital assets are recorded with correct descriptions and dates acquired. Assure all capital assets are recorded at the correct amount or invoice cost. Assure that additions, deletions, and changes to capital asset inventories are recorded accurately and timely. Risk Assessment Inaccurate records regarding capital asset equipment can lead to loss and misuse of state equipment. Equipment Inventory Policy The policy is posted on the SWOSU website under Equipment Inventory Policy and is Attachment A to this document. Procedures In an effort to maintain accurate capital asset control, the following procedures will be administered by the Business Affairs staff. The Purchasing Coordinator/Inventory Control Clerk (ICC) will spend approximately 24 hours per month physically documenting the inventory in each building or department in this order: a) Comptroller will send an email to department head and administrative assistant to set up a date and time for the review. b) ICC will be furnished a list of capital assets for the department or building and a list of inventory assets for all grants. c) ICC will work with Administrative Assistants or others to locate the equipment. All notes on the equipment list will be initialed by the ICC and Administrative Assistant (Ref Attachment B). -
Sinclair Broadcast Group Reports Record 1St Quarter Revenue and Broadcast Cash Flow; Pro Forma BCF up 7%, ATCF Per Share up 35%
Sinclair Broadcast Group Reports Record 1st Quarter Revenue and Broadcast Cash Flow; Pro Forma BCF Up 7%, ATCF Per Share Up 35% BALTIMORE, April 30 /PRNewswire/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) (the "Company") reported today its financial results for the three months ended March 31, 1997. Total revenues increased to $108.2 million for the three months ended March 31, 1997, from $47.8 million for the three months ended March 31, 1996, or 126.4%. These increases in broadcast revenues were primarily the result of acquisitions consummated by the Company during 1996 (collectively, the "Acquisitions"), and growth in television broadcast revenue. The Super Bowl on FOX was a significant driver of revenue during the quarter. Broadcast cash flow increased to $42.8 million for the three months ended March 31, 1997, from $22.8 million for the three months ended March 31, 1996,or 87.7%. The increase in broadcast cash flow for the three months ended March 31, 1997, as compared to the three months ended March 31, 1996, resulted primarily from the Acquisitions and growth in television broadcast cash flow. Operating cash flow increased to $39.3 million for the three months ended March 31, 1997, from $21.5 million for the three months ended March 31, 1996, or 82.8%. The increases in operating cash flow for the three months ended March 31, 1997, as compared to the three months ended March 31, 1996, resulted primarily from the Acquisitions and growth in television broadcast cash flow. After tax cash flow increased to $19.5 million for the three months ended March 31, 1997, from $13.0 million for the three months ended March 31, 1996, or 50.0%.