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Statement of Cash Flows

The balance sheets for 2004 and 2003 for Columbia Sportswear are attached. In addition, Columbia reported the following information:
? 2004 net income was $138,624. Tax expense was $76,297.
? Columbia did not pay dividends in 2004.
? Columbia sold property, plant and equipment for $40 cash and recognized a loss of $541 on this sale.
? Columbia sold investments for cash at original cost (i.e., there was no gain or loss).
? Depreciation of plant, property and equipment totaled $18,544 in 2004. Amortization of intangible assets totaled $84.
? Assume all capital expenditures and purchases of other long-term assets were paid in cash.
? Other liabilities consist of various long-term operating liabilities.

Note you will have to determine the effect on the cash flow statement of any other event(s) by analyzing the given information.

1) Prepare the cash flow statement for 2004 using the indirect method.

2) Suppose you are an investor. Evaluate Columbia's policy of not paying you a dividend. Why may Columbia not pay a dividend? Does the company have sufficient cash flow to pay a dividend? Explain.


Solution Preview

Please see the attached file for the statement of cash flows.

A company many not pay dividends since it may be a growing company and needs cash for investment. The company may feel that it is able to earn a better return on investment then what the shareholders may be able to get. The ...

Solution Summary

The solution explains how to prepare a statement of cash flows