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Greenleaf Company: Prepare Statement of Cash Flows SFAS 95

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The cash flow data of Greenleaf Company for the year ended December 31, 2004 are as follows:

Cash payment of dividends
$ 50,000

Purchase of land
$ 48,000

Cash payments for interest
$ 20,000

Cash payments for salaries
$ 90,000

Sale of equipment
$ 76,000

Retirement of common stock
$ 50,000

Purchase of equipment
$ 60,000

Cash payment to suppliers
$170,000

Cash collection from customers
$400,000

Cash at beginning of year
$100,000

1. Prepare a statement of cash flows for Greenleaf using the direct method in accordance with SFAS 95.

2. Discuss, from an analyst's viewpoint, the purpose of classifying cash flows into the categories required by SFAS 95.

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Your tutorial contains a Cash Flow Statement and a 265 word discussion about the importance of the categories for analysts. A reference is given for more study.

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1. Prepare a statement of cash flows for Greenleaf using the direct method in accordance with SFAS 95.

2. Discuss, from an analyst's viewpoint, the purpose of classifying cash flows into the categories required by SFAS 95.

The categories of operating, investing and financing assist the analyst in evaluating whether the firm is generating enough cash from operating to be self-sufficient. Firms that don't generate enough cash flow from operations are at great risk of failure because you can sell off ...

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  • MSc, University of Virginia
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