Question V Columbia Sportswear
The comparative balance sheet from Columbia Sportswear's 2011 financial statements appears below:
Columbia Sportswear
Statement of Financial Position
As of December 31, 2010 and 2011
(amounts in $millions)
|
Assets
|
2011
|
2010
|
|
Cash
|
$ 130
|
$ 104
|
|
Short-term investments
|
145
|
160
|
|
Accounts receivable
|
267
|
206
|
|
Inventories
|
165
|
126
|
|
Deferred income taxes
|
22
|
17
|
|
Prepaid expenses
|
10
|
5
|
|
Total current assets
|
$ 739
|
$ 618
|
|
Property, plant, and equipment, net
|
155
|
126
|
|
Goodwill and other intangibles
|
38
|
37
|
|
Total assets
|
$ 932
|
$ 781
|
|
Liabilities and shareholders' equity
|
|
|
|
Accounts payable
|
$ 78
|
$ 62
|
|
Accrued liabilities
|
51
|
42
|
|
Income taxes payable
|
12
|
8
|
|
Long-term debt (including current maturities)
|
16
|
21
|
|
Deferred income taxes
|
11
|
9
|
|
Total liabilities
|
$ 168
|
$ 142
|
|
Shareholders' equity
|
764
|
639
|
|
Total liabilities and shareholders' equity
|
$ 932
|
$ 781
|
The Income Statement for the year ended December 31, 2011 appears below:
Columbia Sportswear
Income Statement
For the Year Ended December 31, 2011
(amounts in $millions)
|
Sales Revenue
|
$1,095
|
|
Cost of Sales
|
597
|
|
Gross profit
|
498
|
|
Selling, general and administrative expense
|
291
|
|
Net licensing income
|
(4)
|
|
Income from operations
|
211
|
|
Interest income
|
(4)
|
|
Interest expense
|
1
|
|
Income before income tax
|
214
|
|
Income tax expense
|
76
|
|
Net income
|
138
|
Other information:
- The following amounts were included in selling, general and administrative expense:
- Loss on sale of equipment $8 (million)
- Depreciation on property, plant and equipment $21 (million)
- Amortization of intangible assets $5 (million)
- No gain or loss was reported on the sale of short term investments
- No short term investments were purchased in 2011
- During 2011, Columbia received $6 (million) cash from the sale of property, plant and equipment.
- Columbia pays cash to acquire property, plant, and equipment and intangible assets.
- No long-term debt was issued in 2011
- Columbia declared and paid cash dividends of $16 (million) in 2011
Buffy Warren, a successful but frugal investor, doesn't understand the information provided by the Statement of Cash Flows, because it is presented using the indirect method. Fortunately, you were seated next to Ms. Warren on an airplane (in coach) and offered to help. Please answer the following questions: (Round to $millions.)
1. Assume that all sales are credit sales; calculate the amount of cash received from customers during 2011.
2. Assume that cost of sales represents only the cost of inventory that is sold to customers and that accounts payable represents only amounts payable to suppliers of inventory. Calculate the amount of cash paid to suppliers during 2011.
3. Calculate the amount paid to purchase property, plant and equipment during 2011.
4. Calculate the proceeds form the sale of short term investments during 2011.