1. In Module 3, you will take your income statements and start to construct a cash flow
2 .Using the income statement from Assignment 1, forecast a ten year cash flow using the following assumptions: from 2010-2019
Capital Expenditures of $50,000 per year.
Leasehold Improvements of $10,000 per year.
DSO of 75 Days.
Inventory Turnover of 12 times.
Accounts Payable of 30 days.
Depreciation is constant.
The combined Federal and State Tax Rate is 40%.
There are no additional financing expenses associated with the transaction.
After you have completed your cash flow forecast, calculate a Net Present Value assuming a discount rate of 15%.
Please see attached Excel file and pay special attention to the comments I made.
NOTE: I made two cash flows. The other one is with the formulas you provided. ...
How to create a statement of cash flows from income statement
Statement of Cash Flow
Please provide assistance in recording land and stock activity on the statement of cashflows using the indirect method.
Statement of Cash Flows, Indirect Method
Following are an income statement for Boulder Hill, Inc., for the year ended December
31, 2004, and the company's balance sheets as of December 31, 2003 and 2004.
Boulder Hill, Inc.
December 31, 2003 and 2004
Cash $ 12,100 $ 36,500
Accounts Receivable 10,600 12,700
Inventory 14,700 13,000
Prepaid Expenses 1,300 700
Total Current Assets $ 38,700 $ 62,900
Equipment $ 52,000 $ 52,000
Less: Acc. Depreciation (16,300) 35,700 (22,000) 30,000
Investment in Land 5,100 ______
Total Assets $ 79,500 $ 92,900
Accounts Payable $ 7,100 $ 5,200
Accrued Liabilities 3,300 3,700
Total Current Liab. $ 10,400 $ 8,900
Common Stock $ 4,500 $ 4,800
Additional PIC 18,200 20,300
Retained Earnings 46,400 58,900
Total SE 69,100 84,000
Total Liabilities and SE $ 79,500 $ 92,900
Boulder Hill, Inc.
For the Year Ended December 31, 2004
Sales $ 92,900
Cost of Goods Sold (36,800)
Gross Profit $ 56,100
Selling & General Expenses $14,600
Depreciation Expense 5,700 (20,300)
Operating Income $ 35,800
Loss on Sale of Land (2,500)
Income before Income Tax $ 33,300
Income Tax Expense (13,300)
Net Income $ 20,000
192 SECTION THREE STATEMENT OF CASH FLOWS AND FINANCIAL STATEMENT ANALYSIS
The prepaid expenses and accrued liabilities included in Boulder Hill's balance
sheets involve selling or administrative (operating) expenses. All of Boulder Hill's
sales and merchandise purchases are made on credit. Following is additional financial
information obtained from Boulder Hill's accounting records for 2004.
(a) Collections of accounts receivable $90,800
(b) Purchases of merchandise 35,100
(c) Payments of accrued (operating) liabilities 3,300
(d) Payments of operating expenses 9,600
(e) Prepayments of operating expenses 700
(f) Expiration of prepaid (operating) expenses 1,300
(g) Payments to suppliers 37,000
(h) Proceeds from sale of land 2,600
(i) Sale of 300 shares of $1 par value common
stock for $8 per share 2,400
(j) Declaration and payment of cash dividends
on common stock 7,500
(k) Payment of 2004 income taxes 13,300
(l) Accrual of unpaid operating expenses at year-end 3,700
(m) Year-end adjusting entry to record depreciation
expense on equipment 5,700
Prepare a statement of cash flows for Boulder Hill for the year ended December 31,
2004, using the indirect method.