1. Initial cash flow at t=0: Purchase: -$700‚000 Shipping and installation: -$100‚000 Depreciable basis = $800‚000 Old machine after taxes = $120‚000 - ($120‚000-$80‚000)(.40) = $104‚000 Initial Cash flow = -$800‚000 + $104‚000 = -$696‚000 Depreciation: Year 1: $800‚000 * .3333 = $266‚640 Year 2: $800‚000 * .4445 = $355‚600 Year 3: $800‚000 * .1481 = $118‚480 Year 4: $800‚000 * .0741 = $59‚280 Yearly revenue change: Decrease operating expenses of $90‚000 Incremental net cash flow
Premium Income statement Cash Generally Accepted Accounting Principles
Difference Between Cash Flow and Funds Flow Statement Many people think that both cash and fund are same‚ however they both are different and so is the case with cash flow statement and funds flow statement. Let’s look at some of the differences between cash flow and funds flow statement – 1. While funds flow statement reveals the change in the working capital of a company between two balance sheet dates while cash flow statement reveals the change in the cash position of the company between two
Premium Cash flow Balance sheet Cash flow statement
E1-5 The following information was taken from the 2006 financial statements of pharmaceutical giant Merck and Co. All dollar amounts are in millions. Retained earnings‚ January 1‚ 2006 $37‚980.0 Materials and production expense 6‚001.1 Marketing and administrative expense 8‚165.4 Dividends 3‚318.7 Sales revenue 22‚636.0 Research and development expense 4‚782.9 Tax expense 1‚787.6 Other revenue 2‚677.1 Hint: Prepare income statement and retained earnings statement
Premium Income statement Revenue Income
21 No. 1 – Acquisition Analysis Brau Auto‚ a national autoparts chain‚ is considering purchasing a smaller chain‚ South Georgia Parts (SGP). Brau’s analysts project that the merger will result in the following incremental free cash flows‚ tax shields‚ and horizon values: Years 1 2 3 4 Free cash flow $1 $3 $3 $7 Unlevered horizon value 75 Tax shield 1 1 2 3 Horizon value of tax shield 32 Assume that all cash flows occur at the end of the year. SGP is currently
Premium Finance Free cash flow Corporate finance
Cash Flows for Discounting Calculations When managers are forecasting the cash flows for a project‚ they will consider the expected revenues and costs‚ but they must also include an estimate for working capital requirements. The working capital will be required in period 1 to allow the business to acquire inventories and build up debtors (receivables) to the extent that these are not matched by trade. The working capital will be recovered at the end of the project when the inventories are sold‚
Premium Cash flow Net present value Tax
Statement of Cash Flows Solutions to Questions 14-1 The statement of cash flows highlights the major activities that impact cash flows and hence affect the overall cash balance. 14-2 Cash equivalents are short-term‚ highly liquid investments such as Treasury bills‚ commercial paper‚ and money market funds. They are included with cash because investments of this type are made solely for the purpose of generating a return on temporarily idle funds and they can be easily converted to cash. 14-3 (1) Operating
Premium Generally Accepted Accounting Principles Balance sheet Accounts receivable
José A Valdés 3 de octubre de 2013 Sem. De Contabilidad Prof. Alejandro Méndez Case 11-1 Polluter Corp Facts of Case: Polluter Corp is an SEC registrant and manufacturer household cleaning products. In the course of operations‚ Polluter Corp emits emission pollutants; The Company receives emissions allowances‚ (EAs‚) from the government for 2010 to 2030. Polluter Corp will upgrade their production facilities in 2014 in order to reduce their pollutants. Emissions Allowance
Premium Revenue Generally Accepted Accounting Principles
FOUNDATION OF FINANCE (BWFF1013) FIRST SEMESTER 2012/2013 (A121) CHAPTER 2-FINANCIAL STATEMENT AND CASH FLOWS Section A Please circle TRUE or FALSE to the following statements. 1) An income statement reports a firm’s cumulative revenues and expenses from the inception of the firm through the income statement date. Answer: FALSE 2) A firm’s income statement reports the results from operating the business for a period of time‚ while the firm’s balance sheet provides a snapshot of
Premium Generally Accepted Accounting Principles Balance sheet Inventory
CORPORATE LIQUIDITY‚ CASH FLOW SENSITIVITY‚ AND INVESTMENT DECISION Written by: Destria Kurnianti 10/309731/PEK/15164 Ratified on 18 Januari 2012 Supervisor Prof. Marwan Asri‚ MBA‚ Ph.D INTRODUCTION Modigliani and Miller (1958)‚ in a perfect market conditions there is no relationship between investment decisions and financing decisions. Although the assumption of perfect markets is eliminated‚ the separation between investment decisions and financing
Premium Cash flow Corporate finance
Week 5-Check Point-Preparing a Statement of Cash Flows Anderson‚ C. Axia College of University of Phoenix Due: August 7‚ 2011 ACC/230 Nathan McDaniel In this paper I will show the Balance Sheet and Income Statement for Little Bit‚ Inc.‚ and then I will draw up a Statement of Cash Flows for Little Bit‚ Inc.‚ then I will give you an analysis of the Statement of Cash Flows that I have drawn up. Balance Sheet for 2009 December 31‚ 2009 2008 Cash $ 40‚000 $ 24‚000 Accounts receivable (net)
Premium Generally Accepted Accounting Principles Cash flow Cash