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In: Business and Management

Submitted By pspsantus
Words 321
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Cash Accounts Receivable Mechandise Inventory Property and Equipment Less: Accumulated DepreciaHon 34,000 45,000 31,000 121,000 -­‐30,000 201,000 36,000 1,200 38,000 88,600 37,200 201,000

29,000 28,000 38,000 100,000 -­‐25,000 170,000 27,000 1,400 44,000 72,600 25,000 170,000

Accounts Payable Wages Payable Notes Payable, Long Term Contributed Capital Retained Earnings

Income Statement for 2011 Sales Cost of goods sold Other expenses Net Income

130,000 70,000 37,800 22,200

1) McPherson Contruc3on Supply Consolidated statement of cash flows Annual statement at Dec 31, 2011 Direct Method Cash Flows From Opera3ng Ac3vi3es Cash collected from customers Cash collected for interest Cash payments to suppliers Cash payments for employees Cash payments for income taxes Cash expenses other Net Cash Cash Flows from Inves3ng Ac3vi3es Property and Equipment Net Cash Used in InvesHng AcHviHes Cash Flows from Financing Ac3vi3es Issuance of Stocks Note Payable Dividends Declared and Paid

113,000 0 -­‐54,000 -­‐20,200 -­‐6,000 -­‐6,800 26,000

-­‐21,000 -­‐21,000

16,000 -­‐6,000 -­‐10,000

Net Cash Used in Financing AcHviHes Net Increase in Cash Cash 1 jan 2011 Cash balance at 31 dec 2011

0 5,000 34,000 39,000

2) Evaluate the statement of cash flows. Cash collected from customers is relacHvely high, but the payments are also high, although there is a posiHve Net Cash from OperaHng AcHviHes. The Net Cash from OperaHng AcHviHes could be improved by reducing expenses and/or increasing revenue. This would allow further cash to be used in InvesHng acHviHes to consolidate the company's growth

The investment in new equipment shows that the company is trying to increase revenue (new machines, more machines…) which will be a future source of more cash for the business growth startegy and to the stakeholders via Dividends…...

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