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 at t=1:
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The importance of the concept of cash-flow for the business finance Definition: Cash flow is the movement of money into or out of a business‚ an account or an investment. Normally‚ when the cash inflow is greater than the cash outflow it is a sign of a good financial situation because cash flow is essential for the survival of a business or even to any individual financial condition. If the company can meet its obligations and keep a healthy inflow of cash it has a healthy situation and the
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year ended December 31‚ 2010. Cash received from lenders $20‚000 Cash received from customers 60‚000 Cash paid for new equipment 35‚000 Cash dividends paid 8‚000 Cash paid to suppliers 18‚000 Cash balance 1/1/10 12‚000 Hint: Prepare a statement of cash flows. (SO 5) Instructions • Prepare the 2010 statement of cash flows for Damon Corporation. • Suppose you are one of Damon’s creditors. Referring to the statement of cash flows‚ evaluate Damon’s ability to repay
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Financial Analyst Date: 10/5/13 Re: Corporate Financial Position/Statement of Cash Flows I have been charged to examine the Financial Statements of Carpino Company for the purpose of providing an objective opinion regarding organizational capacity to generate sufficient cash to continue as a going concern. Toward that end‚ I have examined financial statements and have prepared the attached Statement of Cash Flows for the Year Ended January 31‚ 2007. I am pleased to inform Carpino Company stockholders
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the syllabus for examples.The points for each question are listed in parentheses at the start of the question‚ and the total points for the entire assignment adds up to 100. You are strongly encouraged to use spreadsheets. Refer to Note on Sample Cash Flow Template. Question 1 (5 points) The project with the highest IRR is always the project with the highest NPV. Your Answer | | Score | Explanation | True | | | | False | ✔ | 5.00 | Correct. Try now to sort this out in different contexts
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paying cash‚ manufacturing the product‚ selling the product and collecting cash. During the payment‚ the cash need occurs. Cash need should be covered by going into a debt. Cash budget is a primary tool in short-term financial planning. It is prepared after the operating budgets (sales‚ manufacturing expenses or merchandise purchases‚ selling expenses‚ and general and administrative expenses) and the capital expenditures budget are prepared. The cash budget starts with the beginning cash balance
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Writing Assignment Week 1 Question 2.2 – Accounting and Cash Flows: Why is it that the revenue and cost figures shown on a standard income statement may not be representative of the actual cash inflows and outflows that occurred during a period? Financial Statements are prepared according to accrual rule of ‚ according to which cost and revenue are recorded as they occur and not when they are actually received or paid. This is why cash flows during the year may be different from revenue and costs
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Chapter 12 Problems 1. Cash flow (LO2) Assume a corporation has earnings before depreciation and taxes of $100‚000‚ depreciation of $50‚000‚ and that it has a 30 percent tax bracket. Compute its cash flow using the format below. Earnings before depreciation and taxes _____ Depreciation _____ Earnings before taxes _____ Taxes @ 30% _____ Earnings after taxes _____ Depreciation _____
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Cash is the life blood of a business and it can’t operate without it. Survival of a business depends upon its ability to meet liabilities when they fall and thus requires cash. When considering the overall cash flow of the yacht business we can see that it is suffering from cash flow problems ever since the business started. Although the monthly deficit has been decreasing every month due to the increased sales‚ the overall balance carried forward is gradually going up. It would be advisable
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E S 5 & 6 Cash flow reporting and analysis REVISED BY DR SIMONA SCARPARO (FEBRUARY 2013). EARLIER R E V I S E D B Y D R G U S H O S S A R I ( J A N U A R Y 2 0 1 0 ) ‚ B A S E D O N O R I G I N A L M AT E R I A L P R E PA R E D BY GARRY CARNEGIE‚ GRAEME W INE‚ CHRISTINE JUBB AND JUDY NAGY Contents Lectures 5 & 6: Introduction 1 Objectives 1 Learning resources 1 Prescribed text Online readings Glossary CloudDeakin 1 2 2 2 Importance of cash flow information
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