FA Module 5: The Cash Flow Statement – homework assignment

(The attached PDF file has better formatting.)

Homework assignment: Cash flow indirect method

A firm’s financial statements show the following amounts:

    Calendar Year 20X1    Calendar Year 20X2
Cost of goods sold     375    400
Net revenue     950    1000
Depreciation expense    55    65
Net income    225    250
Shareholder dividends     75    90
    December 31, 20X1    December 31, 20X2
Accounts receivable     130    170
Inventory
        90    110
Accounts payable     85    115


Fifty percent of the firm’s sales are on credit. The only current entries on the balance sheet are cash and marketable securities, accounts receivable, accounts payable, and inventory. For calendar year 20X2:

A.    What is the receivables turnover?
B.    What is the cash received from customers?
C.    What is the gross profit margin?
D.    What is the inventory turnover?
E.    What is the inventory bought?
F.    What is the cash paid to suppliers?
G.    What is the payables turnover?
H.    What is the operating cash flow? (Assume shareholder dividends are a financing cash flow, not an operating cash flow.)
I.    What is the change in retained earnings?

Check your work with the practice problem on the NEAS discussion forum. The accounting entries differ for the homework assignment, but the formulas are the same as for the practice problem.