Need to know what method of computing net cash provided by operating activities
ID: 2482929 • Letter: N
Question
Need to know what method of computing net cash provided by operating activities does Tootsie Roll use please. Thanks!
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) For the year ended December 31, 2011 2009 2010 $528,369 $517,149 $495,592 Net product sales Rental and royalty revenue Total revenue Product cost of goods sold Rental and royalty cost Total costs Product gross margin Rental and royalty gross margin Total gross margin Selling, marketing and administrative expenses Impairment charges Earnings from operations Other income (expense), net Earnings before income taxes Provision for income taxes Net earnings 4,299 4,136 532,505 365,225 1,038 366.263 163,144 3,098 3,739 499,331 319,775 852 320.627 175,817 2,887 521,448 349,334 1,088 350.422 167,815 3,211 166,2421/1,026 1, 108,276 106020 178,704 106,316 57.966 2,946 60,912 16,974 $43,938 103,755 14,000 60,949 2,100 63,049 9,892 64,710 8,358 73,068 20,005 $53,063 Net earnings Other comprehensive earnings (loss) Comprehensive earnings $43,938 $53,063 $53,157 (8,140 $35,198 $54,246 2,845 $56,002 Retained earnings at beginning of year. Net earnings Cash dividends Stock dividends Retained earnings at end of year $135,866 $147,687 $144,949 43,938 53,063 53,157 $114.26686)(32,629) (18,360) (18,078) (17,790) (47,175) (46,806) (32,629) $114,269 $135,866 $147,687 Earnings per share j0 $0.90 $0.89 Average Common and Class B Common shares outstanding 57,892 58,685 59,425 (The accompanying notes are an integral part of these statements.)Explanation / Answer
AN ENTERPRISE'S CASH FLOW FROM OPERATING ACTIVITIES CAN BE PERPARED BY EITHER USING DIRECT METHOD OR INDIRECT METHOD. ALTHOUGHT FASB ENCOURAGE TO USE DIRECT METHOD FOR COMPUTING CASH FLOWS FROM OPERATING ACTIVITIES BUT INDIRECT METHOD IS USED BYMOST OF THE COMPANIES.
UNDER DIRECT METHOD,THE RECEIPTS & PAYMENTS OF CASH FOR THE OPERATION OF BUSINESS DURING A YEAR ARE TAKEN INTO ACCOUNT FOR PREPARING THE CASH FLOW FROM OPERATING ACTIVITY. DIFFERENCE IN SUCH CASH RECEIPT & CASH PAYMENT IS NET CASH FLOW FROM OPERATING ACTIVITES.
UNDER INDIRECT METHOD, NET INCOME FROM INCOME STATEMENT IS USED AS STARTING POINT. FURTHER ADJUSTMENTS ARE MADE TO
1. REMOVE NON CASH ITEMS
2. NON OPERATING ITEMS (GAINS & LOSSES) ARE REMOVED.
3. ADJUSTMENTS ARE MADE FOR CHANGES IN CURRENT ASSETS & CURRENT LIABILITIES RELATED TO OPERATING ACTIVITIES BASED ON MONETARY CHANGE OCCURRED DURING THE YEAR IN VARIOUS BALANCE SHEET HEADS. CONVERTING BOOKS FROM ACCURAL TO CASH ACCOUNTING.
IN THE ABOVE QUESTION TOOTISE ROLL INDUSTRIES. INC & SUBSIDIARIES ARE USING INDIRECT METHOD FOR COMPUTING NET CASH FLOWS FROM OPERATING ACTIVITIES.AS THE COMPANY STARTS ITS CASH FLOW WITH NET EARRINGS, WHICH IS FURTHER ADJUSTED FOR NON CASH ITEMS. THEN ADJUSTED FOR NON OPERATING ITEMS. FURTHER CURRENT ASSESTS & CURRENT LIABILITIES ARE ADJUSTED TO REACH CASH FLOWS FROM OPERATING ACTIVITIES.
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