7. South Sea Baubles, Inc. has the following highlights from its balance sheet a
ID: 2735547 • Letter: 7
Question
7. South Sea Baubles, Inc. has the following highlights from its balance sheet and income statements for FY 2013 and 2014.
Balance Sheet as of End of Fiscal Year
(Figures in Millions of USD)
2013
2014
Assets
Cash & Mkt. Securities
40
65
Other Current Assets
50
75
Net Fixed Assets
800
900
Liabilities
Current Liabilities
50
60
Long-Term Debt
600
700
Income Statement for Fiscal Year 2014
(Figures in Millions of USD)
Revenue
1,950
Cost of Goods Sold
1,030
Depreciation
350
Interest Expense
240
Assume South Sea Baubles, Inc. (the company in the prior question) neither issued nor retired any shares in 2014 and that its current portion of long-term debt remained unchanged in 2014 relative to the prior year. Construct SSB’s cash flow statement and answer the following:
What were SSB’s net cash flows from operations for 2014?
What were SSM’s net cash flows from investment activities in 2014?
What were SSB’s net cash flows from financing activities in 2014?
2013
2014
Assets
Cash & Mkt. Securities
40
65
Other Current Assets
50
75
Net Fixed Assets
800
900
Liabilities
Current Liabilities
50
60
Long-Term Debt
600
700
Explanation / Answer
HEADS UP COMPANY Statement of Cash Flows(Extract) Cash Flows from Operating Activities Net Income as per Profit and Loss Account 330 Add: Depreciation 350 Less: Increase in other Current Assets -25 Add: Increase in current Liability 10 Net cash from operating activities 665 Cash flows from investing activities Purchase of property, plant, and equipment -100 Proceeds from sale of equipment 0 Net cash used in investing activities -100 Cash flows from financing activities Proceeds from issuance of long-term debt 100 Net cash used in financing activities 100
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