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No direct exchange transactions occurred at ABC during the year. No dividends were paid during the year. ABC uses the indirect method to prepare its statement of cash flows.
Required: For Accounting Statement of Cash Flow, calculate ABCs net cash provided (used) by operating activities.
Operating activities:
Net Income Adjustments: Depreciation Accounts Receivable Prepaid Expenses Accounts Payable
Net cash provided or (used) by operating activities
Amount $35,000
Calculate: 1. how many days on average did it take Bayside to sell its inventory in 2010? 2. What is the debt-equity ratio for 2010? 3. What is the times interest earned ratio for 2010? 4. What is the equity multiplier for 2010? 5. What is the return on equity for 2010?
Solutions:
1. Inventory turnover for 2010 = $4,060 $1,990 = 2.04; Days' sales in
$4,060 ($1,560+$1,990)/2 = 2.287324; Days' sales in inventory = 365 2.287324= 159.6 days
2.
Debt-equity ratio for 2010 = ($1,170 + $500) ($3,500 + $1,200) =.355 = 35.5% Times interest earned for 2010 = $1,200 $30 = 40 Equity multiplier for 2010 = $6,370 ($3,500 + $1,200) = 1.36 Return on equity for 2010 = $760 ($3,500 + $1,200) = .162 = 16.2%
3. 4. 5.