assignment 3
Decision Case 14-1
1. All numbers in thousands of dollars*
Golf America, Inc.
Statement of Cash Flows
Year Ended December 31, 2014
Cash flows from operating activities:
Net income
$105 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
$46
Amortization of patents
11
Increase in accounts receivables ($72-$61)
(11)
Increase in inventories ($194-$181)
(13)
Increase in accounts payable ($63-$56)
7
Decrease in accrued liabilities ($17-$12)
(5)
35 Net cash provided by operating activities
140
Cash flows from investing activities:
Acquisition of property, plant and equipment ($61-$46=$15; $125-$15=$110)
$(110)
Acquisition of long-term investments
(31)
Net cash used for investing activities
(141)
Cash flows from financing activities:
Issuance of common stock ($149-$61)
$88
Payment of long-term notes payable ($264-$179)
(85)
Payment of cash dividends ($156+$105-$221)
(40)
Net cash used for financing activities
(37)
Net decrease in cash
$(38)
Cash balance, December 31, 2013
63
Cash balance, December 31, 2014
$25
2. In our opinion 2014 was a good year for Golf America because, for example, net income increased by 110% from 2013 to 2014. Not only did net income increased but also Inventories and property, plant and equipment and Stockholder’s Equity increased. Golf America also decreased its long-term notes payable from $264,000 in 2013 to $179,000 in 2014 (32% decrease).
Decision Case 14-2
1. Showcase Cinemas seems to be the better investment out of the two companies because its main source of cash income comes from its operating activities ($70,000) while Theater by Design’s main source of cash income comes from the sale of plant assets ($40,000). Every company should look forward to having its operating activities being its main source of income as it shows how strong a business really is. Another reason for investing
1. All numbers in thousands of dollars*
Golf America, Inc.
Statement of Cash Flows
Year Ended December 31, 2014
Cash flows from operating activities:
Net income
$105 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
$46
Amortization of patents
11
Increase in accounts receivables ($72-$61)
(11)
Increase in inventories ($194-$181)
(13)
Increase in accounts payable ($63-$56)
7
Decrease in accrued liabilities ($17-$12)
(5)
35 Net cash provided by operating activities
140
Cash flows from investing activities:
Acquisition of property, plant and equipment ($61-$46=$15; $125-$15=$110)
$(110)
Acquisition of long-term investments
(31)
Net cash used for investing activities
(141)
Cash flows from financing activities:
Issuance of common stock ($149-$61)
$88
Payment of long-term notes payable ($264-$179)
(85)
Payment of cash dividends ($156+$105-$221)
(40)
Net cash used for financing activities
(37)
Net decrease in cash
$(38)
Cash balance, December 31, 2013
63
Cash balance, December 31, 2014
$25
2. In our opinion 2014 was a good year for Golf America because, for example, net income increased by 110% from 2013 to 2014. Not only did net income increased but also Inventories and property, plant and equipment and Stockholder’s Equity increased. Golf America also decreased its long-term notes payable from $264,000 in 2013 to $179,000 in 2014 (32% decrease).
Decision Case 14-2
1. Showcase Cinemas seems to be the better investment out of the two companies because its main source of cash income comes from its operating activities ($70,000) while Theater by Design’s main source of cash income comes from the sale of plant assets ($40,000). Every company should look forward to having its operating activities being its main source of income as it shows how strong a business really is. Another reason for investing