Cash Flows and Capital Budgeting
Case Study Bob Smith Loan Review Data for Teams Comparative Balance Sheets and Cash Flow Statement Worksheet.
|
ASSETS
|
2014
|
2013
|
Cash Up or Down
|
|
Cash and marketable securities
|
$ 33,411
|
$ 16,566
|
$ 16,845
|
|
Accounts receivable
|
260,205
|
318,768
|
$ 58,563
|
|
Inventory
|
423,819
|
352,740
|
$ (71,079)
|
|
Other current assets
|
41,251
|
29,912
|
$ (11,339)
|
|
Total current assets
|
758,686
|
717,986
|
$ (40,700)
|
|
Gross Plant and equipment
|
1,931,719
|
1,609,898
|
(321,821)
|
|
Less: Accumulated depreciation
|
(419,044)
|
(206,678)
|
212,366
|
|
Net plant and equipment
|
1,512,675
|
1,403,220
|
$ (109,455)
|
|
Goodwill and other assets
|
382,145
|
412,565
|
$ 30,420
|
|
Total Assets
|
2,653,506
|
2,533,771
|
(119,735)
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Accounts payable and accruals
|
378,236
|
332,004
|
$ 46,232
|
|
Notes payable
|
14,487
|
7,862
|
$ 6,625
|
|
Accrued income taxes
|
21,125
|
16,815
|
$ 4,310
|
|
Total current liabilities
|
$ 413,848
|
$ 356,681
|
$ 57,167
|
|
Long-term debt
|
679,981
|
793,515
|
$ (113,534)
|
|
Total liabilities
|
1,093,829
|
1,150,196
|
(56,367)
|
|
Preferred stock
|
|
|
|
|
Common stock (10,000 shares)
|
10,000
|
10,000
|
0
|
|
Additional paid in capital
|
975,465
|
975,465
|
0
|
|
Retained earnings
|
587,546
|
398,110
|
189,436
|
|
Less: Treasury stock
|
(13,334)
|
|
(13,334)
|
|
Total common equity
|
1,559,677
|
1,383,575
|
176,102
|
|
Total Liabilities and Equity
|
2,653,506
|
2,533,771
|
119,735
|
In addition, it was reported that the company had a net income of $3,155,848 and depreciation expenses were equal to $212,366 during 2014.
Net Income $3,155,848
Depreciation $212,366
Dividends Paid -$2,966,412
1. The bank told Bob to increase cash to $70,000 from 2013 to 2014. But cash increased from $16,566 in 2013 to just $33,411 in 2014, well short of $70,000, why?
2. Explain how the six highlighted accounts impacted cash flow from one year to the next. The accounts either added or reduced the cash balance from one year to the next. I.e., the accounts were either a Source or Use of cash.
3. This one worksheet provides all the data you need to complete the project. You may want to assign each team member a respective 'Explain'.