The Marshall Company 20x2 20x1 Change s 10 $20 (10) 80 40 40 Stockholders\' equi
ID: 2339556 • Letter: T
Question
The Marshall Company 20x2 20x1 Change s 10 $20 (10) 80 40 40 Stockholders' equity Current assets Current liabilities (detailed) $95 S 22 s 73 Cash Receivables, net 25 8 Long-term debt 110 205 179 26 Total current assets S123 SKS $38 Plant assets (nct of accumulated depreciation) 255 11145 Total liabilities and Total assets 5378 $195 $200 tolders' equity $410 $201 $209 income for 20X2 was million. De was S18 million. Fixed assets were purchased for $199 million, $125 million of which was financed via the issuance of long-term debt, the balance outright for cash. Mike Marshall. the president and majority stockholder of Marshall Company, was a superb operating executive. He was imaginative and aggressive in marketing and ingenious and creative in production. But he had little patience with financial matters. After cxamining the most recent balance sheet and income statement, he muttered, "We've enjoyed 15 years of steady growth; 20X2 was our most profitable ever. Despite such profitability, we're in the worst cash position in our history. Just look at those current liabilities in relation to our available cash. This whole picture of the more you make, the poorer you get, just does not make sense. These statements must be cockeyed." 1. Prepare a statement of cash flows using the indirect method, which includes a schedule reconciling net income to net cash provided by operating activities in the body of the statement.Explanation / Answer
cash flow statement
Indirect Method
cash flow from operating activities
net income
65
depreciation
18
changes in working capital
65+18-79
4
cash flow from operating activities
79
cash flow from investing activities
purchase of machinery =199-125
-74
cash flow from investing activities
-74
cash flow from financing activities
cash dividend
-11
cash flow from financing activities
-11
net cash flow during the year
-6
opening cash balance
20
year end cash flow
14
cash flow statement
Indirect Method
cash flow from operating activities
net income
65
depreciation
18
changes in working capital
65+18-79
4
cash flow from operating activities
79
cash flow from investing activities
purchase of machinery =199-125
-74
cash flow from investing activities
-74
cash flow from financing activities
cash dividend
-11
cash flow from financing activities
-11
net cash flow during the year
-6
opening cash balance
20
year end cash flow
14
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