FIN 370 Cash Flow Problem Sets (4-5,4-7,4-8,4-11,4-13)

FOR MORE CLASSES VISIT

www.fin370genius.com
4-5 Multiyear Future Value How much would be in your
savings account in 11 years after depositing $150
today if the bank pays 8 percent per year? (LG4-3) 4-7
Compounding with Different Interest Rates A deposit of
$350 earns the following interest rates: a. 8 percent in
the first year. b. 6 percent in the second year.
Capstone Discussion Question
Due Tuesday, Day 2

What have you learned in this course about the

process of analyzing financial statements?

I have learned that there is a lot more to analyzing

financial statements than I thought. This class has
made me question my decision to go into the
accounting field. I feel inadequate after taking this
class. I am not an articulate, or analytical person. I
tend to get confused easily and do better at putting the
information together than I am at figuring out what it
all means. This is my last block of classes before my
Bachelor program starts, and I don't know if I am ready,
or if I even want to continue. Analyzing financial
statements takes a very detail oriented mind, and one
that is great at problem solving. It is critical to
understand the financial statements, and how they
relate to one another. There is a lot of information that
is not as obvious as it would seem. Looking at the
bottom line will not give a good picture of how a
company is doing financially. It is important to know
the how and why the bottom line looks the way that it
does.

Response 2
I have learned that it takes someone that has the
patience, tenacity, and motivation to truly analyze the
statements. If you go about it not wanting to do the
work you wont give a good analysis. I found that you
have to be willing to dig deeper than most would to get
a full picture of the company. I found that it is not an
easy task to complete. For me the process is a tedious
one. I don't think I would want to go into that type of
accounting where I have to analyze the statements of a
company. I think for me I would be better in specialized
accounting like A/P or A/R. I am better at figuring out
problems and figuring out ways to make them better. I
am better at specific tasks so for me I wouldn't want to
analyze the statements. I am glad to have learned how,
because at some point I am sure it will come in handy.

Response 3
All financial statements are essential documents
because they tell what has happened to a business
over a period of time but most users of financial
statement are more concerned about what will happen
in the future. Stockholders and creditors are
concerned with future earnings and dividends and
company's future ability to repay its debts.
Management is concerned with the company's ability
to finance future expansion.
Working as a bookkeeper I do all the steps in monthly
cycles consisting of entering transactions into the
journals, working with A/R, A/P, payroll and preparing
the reports, but I have not been able to analyze the
reports the way I learned in this class. I learned how
important is to monitor and interpret the results. I
learned how to compare financial statements of a
company with a company from the same industry and
point out the differences and similarities. This class
taught me the importance of analyzing the Income
Statement, Balance Sheet, Cash Flow Statement and
Stockholders Equity each one individually. I learned
how essential is the quality reporting and how useful
this quality is in business decision making. I learned
about key financial ratios: liquidity ratios, activity
ratios, leverage ratios, and profitability ratios. All these
ratios are valuable as analytical tools and will help me
indicate the areas of strength and weakness in a
business. Even though I learned the information step
by step in this class I tent to go over every single
chapter all over again to better absorb the material.
This class taught us the potential of some management
manipulations of financial statements, thus following
the general accounting rules, being honest, ethical and
professional are the ways on leading to safe and
profitable decisions.
-----------------------------------------------------

FIN 370 Final Exam Guide (New 2017)

FOR MORE CLASSES VISIT

www.fin370genius.com
Which one of the following statements is correct concerning the cash
cycle? Accepting a suppliers discount for early payment decreases
the cash cycle. Increasing the accounts payable period increases the
cash cycle. The longer the cash cycle, the more likely a firm will need
external financing. The cash cycle can exceed the operating cycle if
the payables period is equal to zero. Offering early payment discounts
to customers will tend to increase the cash cycle. Precise Machinery
is analyzing a proposed project. Lucent Technologies
Axia College of University of Phoenix

Lucent Technologies is a company based on networking for service

providers, government, and enterprises worldwide (Lucent
Technologies, n.d., Para 1). The products and services they work with
are separated into three categories; service and maintenance,
wireless mobility networking, and wire line networking. Lucent
Technologies is backed by Bell Labs, which does research and
development in networking technologies.
During the years of 2001 to 2003 this company has experienced a
decrease in demand because of other companies loss or capital used
toward spending. This is mainly due to a downturn in the economy. As
an investor this information is necessary to know because it explains
the decrease or increase in sections of the balance sheet. In order to
compare the growth or decline of the companys profit, an investor
must change a balance sheet into a common-size balance sheet. First
when looking at the balance sheet an investor will see that the amount
of paid in capital has increased from the year of 2003 to 2004, the
assets have increased, but the liabilities have decreased. When
running a debt/asset ratio it is noticed that this ratio drops from 1.2 in
2003 to 1.0 in 2004. This shows the companys risk is low when
concerning financial leverage, usually when the debt ratio is less than
one percent it is financed mainly by company equity, so this company
is close to being debt free from creditors.
After changing the balance sheet to a common-size balance sheet
there are several factors an investor will look at. The current assets
have dropped to .48 from .49 in 2004. This does not show harm to the
company because only the accounts receivable dropped while the rest
of the current assets increased. This means the company is not in as
much danger of default on money owed to it. It does have a rise in
marketable securities. The one concern in the assets is the increase of
prepaid cost of pensions and goodwill. Goodwill can be used for tax
breaks but prepaid pensions cannot benefit the company.
When looking at the liabilities section an investor will see a drop in
pension and liabilities and an increase in long term debt, both of
these could be affected because of the drop in the economy. Long term
liabilities are often increased to help a company control interest rate
increases so as an investor cutting back on pension liabilities cuts
back cost to the company and watching interest rate increase show
the company is concerned with its earning and investors. This would
be encouraging or an investor. The stockholders deficit shows a drop
in accumulated deficits from -1.43 to -1.22 and total deficits of -.26 to
-.08. This shows the company is working to control any money loss
and turning it to the companys advantage. Overall it shows the
company is still earning a profit although small. With an increase of
assets and a drop in liabilities the company is showing it is working
in a low risk capital.
After reviewing this information, a creditor or investor must be able
to compare this company to the industry totals. By comparing how
this company compares to other companies similar to it, a person can
see if it is competitive and worth taking a risk. Running ratios will
also show if the company is capable of paying off any debts it has or
if it can acquire the needed cash in case of emergencies. Overall as
an investor, I would say this company would be worth investing in.

Reference
Axia College. (2007). Understanding Financial Statements. Retrieved
May 10, 2010 from Axia College, Week 2 Assignment, ACC/230.
-----------------------------------------------------

FIN 370 Final Exam Guide (New)

FOR MORE CLASSES VISIT

www.fin370genius.com
Which financial statement reports the amounts of cash
that the firm generated and distributed during a
particular time period? statement of retained earnings
Income statement Statement of cash flows Balance
sheet Which of these provide a forum in which
demanders of funds raise funds by issuing new
financial instruments, such as stocks and bonds?

Differentiating Depreciation Methods

There is one main difference between straight line

depreciation and accelerated depreciation. Straight line
is decided by taking the cost of the assets, figuring out
the salvage cost when the use of the asset is finished
and how many years of use the asset has. A person
then takes the cost minus salvage and divides the
remainder by the number of years of use. This amount
is the depreciation expense subtracted each year from
the cost. The accelerated depreciation does not have
the same amount of deprecation subtracted each year.
It does have the cost minus salvage value to figure out
the amount to use but is then divided out differently. A
person takes the sum of the years of a products useful
life, such as three years is 3 + 2 + 1 = 6, then a person
would divide the depreciation amount by 3/6 the first
year, 2/6 the second and finally 1/6 for the final year.
So the amount of depreciation expense is larger to
smaller with accelerated and equal amounts for
straight line.
The advantages of straight line method are it is easier
and faster to figure. The advantage of accelerated
method is it is more accurate when figuring
depreciation expense. The accelerated method has an
advantage and disadvantage concerning taxes. A
company can use the accelerated method to take
advantage of bigger tax breaks at the beginning of an
assets life, but since this amount drops during the
lifespan if the company needs added tax breaks it will
not receive them from these assets in the future. With
the straight line method the amount of tax breaks are
even through the life of the product. Most companies
choose this form of depreciation for reporting purpose
on taxes but will use the accelerated method to figure
taxable income.
As mentioned before the advantage of straight line
depreciation is it is easier to figure and uses the same
total each year for deduction of depreciation expense
but the disadvantage is that if use for taxable income
and reporting a company does not get a bigger tax
break at the beginning of the assets life when they
have just put out the cost for the item and may need a
bigger tax break.
-----------------------------------------------------

FIN 370 Week 1 Calculating Ratios Worksheet (2 Set)

FOR MORE CLASSES VISIT

www.fin370genius.com
This Tutorial contains 2 Set of Answers FIN 370 Week 1
Calculating Ratios Worksheet 1. What is agency
theory? How can setting the appropriate goals for the
firm minimize the agency problem? 2. Differentiate
between profit maximization and wealth maximization
Preparing an Income Statement

The companies net income is profitable when the sales

exceed the cost of goods sold. In this, the gross profit is
$761k. This is beneficial to the company. Though we
took the cost of goods away from the net sales there
are still other areas which need to take a piece of the
pie. For this company, once the SG&A and depreciation
are taken out, the company still contains a profit of
$290k. But the buck does not stop there. Once the
interest income and interest expense are adjusted the
balance before earnings and taxes is $290k. After taxes
are taken out, the company is left with a net profit of
$174k.

In this case I think the company has achieved success

with a net profit of $174k. If the company were unable
to be profitable, the company would eventually go out
of business. We would be able to tell if the company
was not profitable by looking at each section
individually. The cost of goods sold is what stands out
for me. If we pay more to make the product then we
are actually selling it for, there is no profit to be made.
So, I think it should all start there.
-----------------------------------------------------

FIN 370 Week 1 Calculating RatiosLake of Egypt Marina

(3-29, 3-30)

FOR MORE CLASSES VISIT

www.fin370genius.com
FIN 370 Week 1 Calculating Ratios Review the financial
statements for Lake of Egypt Marina, Inc. Complete the
following problem sets from Chapter 3 in Microsoft
Excel
STOCK DIVIDEND

Stock Split
University of Phoenix

Stock Dividend
In the present time, the stock dividend has become
important concept. When dividend is given in form of
stock, it is called stock dividend. In this form of
dividend, the cash does not use. It is important, when
the corporation declares stock dividend, the market
value of the share decreases because the number of
stock increases. The many companies prefer stock
dividend due to the tax benefit. If the individual gets
stock dividend, he does not pay any tax on stock
dividend. Thus the stock dividend reduces tax burden.
On the other hand, the ownership of investors also
spurs up in the company because the number of
holding share increases. There is also disadvantage of
stock dividend. The market value of the share
decreases, so the market value of holding also
decreases (Kennon, 2009).
The ABC Company is leading company in its industry.
The number of outstanding share of the company is
one million. On the other hand, the number of investors
is five millions. The value of market capitalization is
$100 million. The management declares 20% stock
dividend. Thus the 200000 shares will be distributed as
a stock dividend. The number of outstanding share will
be increased by 200000 and the new total number of
outstanding stock will be 1.2 million. On the other
hand, the new value per share in the market will be
$83.33 (100 million/1.2 million). This example is taken
from below mentioned link:
Stock Split
The stock split is also an important concept. When the
management wants to increases number of shares, the
management follows this method. In this method, the
face value of the share is split and number of share
gets increased. Due to increment in number of
outstanding share, the market value of per share also
gets affected but the total market capitalization of the
company does not affect. Both stock split and stock
dividend increase number of outstanding shares but
both are different due to the accounting treatment. In
the stock split, the investors do not get any real
benefit. It is also known as non-cash distribution of
dividend. The motto behind stock split is to increase
trading of the shares in the market (Baker, 2009)
For example, the face value of per share is $100
and the total outstanding shares are 100 million. If the
management of the company announces stock split in
ratio of 1:2, the total outstanding shares will be
increased by 100 million, thus the new total number of
the share will be 200 million. On the other hand, the
face value of the share will reduce by 50%. So the new
face value of the share will be $50. Due to effect of
stock split, the holding share of the investor will also
increase in the prorate basis. If the investor has 10
shares, now he will have 20 shares. It is important
thing that the total issued capital will not be changed.
The illustration of stock split has been got from
following link:
Reverse Stock Split
The reverse stock split is just opposite of stock split. In
this process, the management reduces the number of
outstanding shares. The company increase face value
of the share. In this method corporation decides a ratio
such as 2:1. Thus the company accumulates two shares
in one share. In this method, the total market value of
company does not change. Due to reverse stock split,
the earning per share and face value of per share rises.
Thus the reverse stock split provides just opposite
result from stock split. It is important question, why
company selects this method. When the management
seems that the face value of the share is less as
compared to competitors then the company goes for
this method to make its share value to equal to
competitors shares face value. It is also a sound
strategy to increase treading of shares. If the face
value of share is too cheap in comparison to
competitors, the investors will be discouraged for
investment. For increasing the confidence of investors,
the management uses this method (Mladjenovic,
2009).
For example, an investor holds 100 shares of XYZ
Company and the face value per share is $50. If the
management go for reverse stock split option and
declares one share for 10 shares then the holding of
the individual will reduce 9 shares for every 10 shares.
Thus the new holding of the investor will be 10
(100/10) shares but the face value per share will be
$500. It is also important that the total market
capitalization will remain as same as before reverse
split. The example of the reverse split is take form
below mentioned link:
http://www.sec.gov/answers/reversesplit.htm.

References
Baker, H. K. (2009). Dividends and Dividend Policy. John
Wiley and Sons.
Kennon, J. (2009). All About Dividends. Retrieved May
31, 2010, from
http://beginnersinvest.about.com/od/dividendsdrips1/a/
aa040904_2.htm
Mladjenovic, P. (2009). Stock Investing for Dummies.
Dummies.
-----------------------------------------------------

FIN 370 Week 1 Question and Problem Sets (Ch 1: Q 3,11

Ch 2: Q4,9, CH 3: Q4,7, Ch 4: Q 1,6)

FOR MORE CLASSES VISIT

www.fin370genius.com
Purpose of Assignment Complete the following
Questions and Problems (Concepts and Critical
Thinking Questions for Ch. 1 Only) from each chapter
as indicated. Show all work and analysis. Prepare in
Microsoft Excel or Word.

Analyzing an Income Statement

The net income of Kodak has decreased a bit; it

appears that the company is more profitable. By
conducting a side by side analysis from 2004 to 2003
the company has increased in current assets and
decreased in total assets. It appears that the company
went down in property, plant and equipment net as well
as discontinued operations. So, despite the decrease in
total assets it looks like the company has made a good
decision.

The company has also decreased its total liabilities by

about 4%. I believe this to be good because the short
term borrowings and long term debt has decreased. To
me, this means that the company is tightening their
belt and paying off old debt.

Total shareholders equity has down a little bit in

dollars, but on the percentage level the companys
percentage has gone up. I believe this is because the
company issued $104k more shares in 2004 than in
2003. The company has the same amount of shares
outstanding in 2004 that it did in 2003 as well.
Retained earnings on the stock have gone up in 2004
as well. I believe this is contributed by the more shares
that have been issued.

I believe the profitability of the company is under good

standings. They appear to be making the necessary
adjustments in the company to stay with in a profitable
income.
-----------------------------------------------------

FIN 370 Week 2 Cash Flow Problem Sets (5-1,5-3,5-5,5-

7,5-12,5-15,5-39)

FOR MORE CLASSES VISIT

 www.fin370genius.com
FIN 370 Week 2 Cash Flow Problem Sets Complete the
following problem sets from Chapter 5 in Microsoft
Excel: 5-1 5-3 5-5 5-7 5-12 5-15 5-39
(Calculate monthly payment only) 5-1FutureValue
Compute the future value in year 9 of a $2,000 deposit
in year 1 and another $1,500 deposit at the end of year
3 using a 10 percent interest rate. Cash Flow
Statement Analysis

Cash Flow Statement Analysis

The cash flow statement is important financial
statement of the corporation. The cash flow statement
states from where cash has come and where cash has
been gone. Thus the cash flow statement makes a
relationship between beginning balance and ending
balance of cash. The cash flow statement is prepaid on
the basis of income statement and balance sheet of the
company. The Little Bit Incs beginning cash balance
including marketable securities was $24000. On the
other hand, the ending cash balance including
marketable securities of the company was $40000
(Weygandt, Kimmel & Kieso, 2009).
The net income of the company was $5500 during
2009. The company generated cash inflow from
operating activity is less as compared cash out flow
from operating activities. The company generated
$9000 negative cash balance in operating activity
section of the cash flow statement. On the other hand,
in the investment section, the firm has also negative
cash balance. The firm has $7000 negative balance in
investment section of the cash flow statement. The
Little Bit Inc made investment during the year instead
of selling of assets. Last section of the cash flow
statement is financing activity section. In which, all
finance related activities come. The corporation sold
some shares and borrowed some money from outside
lenders therefore the company has positive case
balance by $32000 in financing activity section.

Reference
Weygandt, J.J.,Kimmel, P.D. & Kieso, D.E. (2009).
Managerial Accounting: Tools for Business Decision
Making. John Wiley and Sons.
-----------------------------------------------------

FIN 370 Week 2 Financial Markets and Institutions

Report (2 Papers)

FOR MORE CLASSES VISIT

www.fin370genius.com
This Tutorial contains 2 Papers FIN 370 Week 2
Financial Markets and Institutions Report Create a
1,050-word report, and include the following: Week 5
DQ 1
Due Tuesday, Day 2

In what ways does the statement of cash flows relate to

the balance sheet and income statement?

It is important to understand what we are doing with

the numbers and the results these numbers give us
because the result is the information that will be
available to us from financial statements. Although
some want to see the income statement and ignore the
other statements we need to use them together to see
the total picture of what is happening to our business.
The relationship between the numbers on the financial
statements shows us everything we need to know
about the business.
The income statement shows income and expenses for
a period of time and if we are making or loosing money.
The balance sheet compares the assets to liabilities
and shows how much money the business would have
if everything is sold today.
The statement of cash flow might be the most critical
statement because there is plenty of information we
can gain form it. This statement relates with the
income statement on operating activities to see if they
are generating cash or not. It is related to the balance
sheet on how much cash is used in investing activities.
In relationship with the balance sheet the cash flow
statement shows what cash is provided or used by
financing activities. It will tell us how much debt has
been paid and will indicated if we are using more debt
or have paid down the credit line.
When the business makes a sale or receives payment
for a sale on credit that is an inflow. A sale shows up as
income on the profit and loss statement and as an
inflow on the cash flow statement. It also shows up
either as cash or accounts receivable on the balance
sheet. Also, how quickly we can collect on accounts
receivable will play a big role in the cash flow. When
the business spends money, it shows up as an expense
in the profit and loss statement and as an outflow on
the cash flow statement. It also shows up on the
balance sheet as a decrease in cash, or an increase or
decrease in liabilities, depending on what the expense
represents.

Response 2
In what ways does the statement of cash flows
relate to the balance sheet and income statement?
The cash flow statement relates to the income
statement and balance sheet. The net income from the
income statement is listed on the statement of cash
flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement
reconciles the net income to the actual cash the
company received from or used during operations. The
second section of the statement of cash Flows is the
cash flow from investing activities which include
purchase or sale of assets. The last section in the
Statement of Cash Flows is the cash flows from
financing activities that includes raising cash by selling
stocks/bonds or borrowing from backs; or cash out
flows from paying back loans. The balance sheet shows
the different account balances at the end of the
accounting period. The statement of cash flows reflects
changes in the accounts listed on the balance sheet
between accounting periods. The net cash from
operating, financing, and investing activities are added
up to calculate the net change in cash.

Week 5 DQ 2
Due Thursday, Day 4

Discuss how the statement of cash flows is utilized by

investors. If you were an investor reviewing a
statement of cash flows, what section might interest
you most? Why? Discuss the circumstances in which
other sections of the statement might be important to
an investor.
Prior to making an investment in a company, one would
want to understand the decisions the owners are
making to fund the operations of the company daily.
Maintaining sufficient cash to acquire new product, pay
overhead, and satisfy generated sales would be the
predominant need of the company. Second need would
be for the company to have sufficient cash to remain
competitive. This may require cash to invest in
research and development, increase inventory as new
product introduction, improve efficiency in plant and
equipment, or cash to satisfy prior borrowing
obligations. By reviewing the statement of cash flow,
the investor can determine if the company is
generating sufficient cash internally to fund operations
or are they requiring outside injection of cash to
finance the short fall in cash needed to operate the
company. Last, the investor can review the statement
of cash flow to better understand the leverage of the
company and the requirement for repayment of debt,
or dividends to reward prior investments.

Response 2
Discuss how the statement of cash flows is utilized by
investors. If you were an investor reviewing a
statement of cash flows, what section might interest
you most? Why? Discuss the circumstances in which
other sections of the statement might be important to
an investor.
The statement of cash flow is utilized by investors
because it has all information integrated from the
balance sheet and the income statement. The
statement of cash flow is used by an investor to see if
the operating activities are greater than the net income
to have earnings that are called high quality. If
operating activities are less, then a red flag will be
raised as to why the net income is not becoming cash.
Another reason would be investors believe cash is the
best. The statement shows all cash coming and going
from the business. If the company generates additional
cash than what is being used, then the company can
reduce their debt, acquire another business, or buy
some of the stock back. The last reason why would be
that financial models are based upon the statement of
cash flow.
If I was an investor reviewing a statement of cash flows
the section that might interest me the most would be
the operating activities. I would like to know how the
company was doing and what areas need to be
improved to have more cash generated in the business.
All the sections are important to an investor so they
can see the complete big picture of their investment.

-----------------------------------------------------

FIN 370 Week 2 Question and Problem Sets (Ch 5: Q3,Q4

Ch 6: Q2, Q20, Ch 7 : Q3,Q11 Ch 8: Q1,Q6)

FOR MORE CLASSES VISIT

 www.fin370genius.com
Prepare in Microsoft Excel or Word. Ch. 5:
Questions 3 & 4 (Question and Problems section):
Microsoft Excel templates provided for Problems 3
and 4

Candela Corporation
Axia College of University of Phoenix

Candela Corporation
Candela Corporation and Subsidiaries have been
working for over 34 years developing and
commercialize aesthetic laser systems that allow
physicians and personal care providers to treat a
variety of cosmetic and medical conditions such as
removal of spider veins, scars, stretch marks, warts, as
well as hair removal and age spots, freckles and
tattoos. Other skin treatments such as psoriasis and
acne and acne scars are also treated. (Axia
College, 2007)
Going from top to bottom on The Candela
Corporation and Subsidiaries Consolidated Statement
of Cash Flows; for the operating activities, 2002 shows
an alarming loss in the net income while 2003 and
2004 for the company are showing a significant and
steady climb in the net income. In 2004 there was a
new category added called Provision for the disposal of
discontinued operations and the category has caused
an increased the account for 2004. Loss from
discontinued operations grew from 2002 to 2003 but
had a significant decline for 2004. Depreciation has
increased over the last 3 years as well. Provision for
bad debts increased significantly too, but an increase
in bad dept is expected as revenue increases. The
provision for deferred taxes shows the company went
from a loss in 2002 and 2003 to show there was no tax
loss in 2004. The tax benefit from exercised stock
options has practically doubled sense 2003. The
changes in assets and liabilities for the last 3 years
have been up and down. Receivables have increased,
notes receivable decreased, and inventories have
increased. Other current assets, other assets have also
increased. Accounts payable has made a significant
decrease in the last 3 years as well as accrued payroll
expenses. The accrued payroll decreasing could mean
that the amount of employees over the years has
decreased as well. The accrued warranty costs have
increased as well; this could mean that the company
renewed equipment warranties. The net cash provided
by operating activities looks to have gone from a loss in
2002 to a large profit in 2003 and then a decrease, yet
still a profit for 2004. It appears on the operations level
that management needs to do more to regulate the
companys finances so there is not an up and down
variance each year.
The cash flow from investing activities shows me
that in the last three years they had large amount of
investments in 2002 and 2003 but now they are letting
them decrease.
 The cash flow from financing activities states that
the proceeds from issuance of common stock have
increased significantly from 2002 to 2003 and rose a
little more in 2004. The repurchases of stock has not
happened sense 2002 and the principle payment of
long-term debt grew in 2003 from 2002 and shows no
activity for 2004. Same goes for the net borrowing on
line of credit; it appears that Candela Corporation is
current on payments to line of credit. So, the net cash
from financial activities looks great for 2004. The cash
and cash equivalents for each year have increased
steadily.
After reviewing the consolidated statement of cash
flows for Candela Corporation, I believe the company is
making a profit, but perhaps need some control over
their operating activities.
Reference

Axia College. (2007). Statement of Cash Flows.

Retrieved June 14, 2010 from Axia
College, Week Six, ACC 230.
-----------------------------------------------------

FIN 370 Week 3 Assignment Financial Ratio analysis

FOR MORE CLASSES VISIT

www.fin370genius.com
Purpose of Assignment Students should understand
how to use the financial information and tools learned
in the class on a public company, obtain public
company SEC reports, and use that data to calculate a
company's financial ratios and their comparison to
industry or competitor standards
Analyzing Statements of Cash Flows

4.8. Research Problem

Choose five companies from different industries and
locate their statements of cash flows
for the most recent year.
(a) Create a table to compare the dollars provided or
used by operating, investing, and financing activities,
as well as the overall increase or decrease in cash.
(b) Create a second table for each company comparing
this same information for each of the three years
presented in that companys statement of cash flows.
Include an additional column that looks at the
combined cash flows for all three years.
(c) Write a short analysis of the information gathered.
Your discussion should address, among other things,
whether cash flow from operating activities is large
enough to cover investing and financing activities, and
if not, how the company is financing its activities.
Discuss differences and similarities between the
companies you have chosen.

(a) Create a table to compare the dollars provided or

used by operating, investing, and financing activities,
as well as the overall increase or decrease in cash.

STATEMENT OF CASH FLOW ANALYSIS

 STARBUCKS HARELY DAVIDSON RITE AID
2008 2008 2008

NET INCOME / STARTING LINE $ 315.5 $

- $ (1,079.0)
OPERATING ACTIVITIES $ 1,258.7 $
(684.7) $ 79.4
INVESTING ACTIVITES $ (1,086.6) $
(393.3) $ (2,933.7)
FINANCING ACTIVITIES $ (184.5) $
1,293.4 $ 2,904.0
CASH $ (11.5) $ 190.7 $
49.9

(b) Create a second table for each company comparing

this same information for each of the three years
presented in that companys statement of cash flows.
Include an additional column that looks at the
combined cash flows for all three years.
STARBUCKS

2008 2007 2006

Net Income/Starting Line 315.5 672.64 564.26

Cash from Operating Activities 1258.70 1331.22
1131.63
Cash from Investing Activities -1086.60-1201.95-
841.04
Cash from Financing Activities -184.50 -171.89 -
155.33
Net Change in Cash -11.50 -31.35 138.80
Net Cash - Beginning Balance 281.30 312.61
173.81
Net Cash - Ending Balance 269.80 281.26 312.61

HARLEY DAVIDSON

2008 2007 2006

Net Income/Starting Line 0 933.84 1043.15

Cash from Operating Activities -684.65 798.15
761.78
Cash from Investing Activities -393.25 391.21 -35.26
Cash from Financing Activities 1293.39 -1037.80-
637.02
Net Change in Cash 190.70 164.46 97.42
Net Cash - Beginning Balance 402.85 238.40
140.98
Net Cash - Ending Balance 593.56 402.85 238.4

RITE AID

2008 2007 2006

Net Income/Starting Line -1078.9926.83 1273.01

Cash from Operating Activities 79.37 309.15
417.17
Cash from Investing Activities -2933.74-312.78 -
231.08
Cash from Financing Activities 2903.99 33.72 -
272.84
Net Change in Cash 49.61 30.08 -86.75
Net Cash - Beginning Balance 106.15 76.07
162.82
Net Cash - Ending Balance 155.76 106.15 76.07
(c) Write a short analysis of the information gathered.
Your discussion should address, among other things,
whether cash flow from operating activities is large
enough to cover investing and financing activities, and
if not, how the company is financing its activities.
Discuss differences and similarities between the
companies you have chosen.

Starbucks operating cash flow has gone up in 2007 and

decreased a little in 2008. The net change in cash for
Starbucks looks a on the down side but previously was
doing well. The net loss in cash at end of year is
decreasing from the previous year. This could mean
that this year there can be a gain.

Harley Davidson's operating cash flow has significantly

decreased from 2007. It appears the company was on
an upward cycle from 2006. The decrease in cash from
operating activities is probable from the lack of
information supplied for net income. With the economy
the way it is and not many people buying at this point
could have an effect on why the net income is
decreasing. With a bounced back economy in the
coming year could reflect a positive gain.

Rite Aid's operating cash flow has taken a significant

decrease as well from previous years. Although, after
taking in cash from investing and cash from financing,
the net change in cash is better than it has been in
previous years. Rite Aids net gain in cash could be
from the ever growing needs in medical supplies. This
also could reflect the expansion of the compa
-----------------------------------------------------

FIN 370 Week 3 Individual AssingmentRisk and Return

Analysis Report (2 Papers)

FOR MORE CLASSES VISIT

www.fin370genius.com
This tutorial contains 2 Papers FIN 370 Week 3 Risk and
Return Analysis Create a 1,050-word report, and
include the following: Explain the relationship
between risk and return Findwhat.com Case -
CheckPoint
ACC 230
Findwhat.com has recorded the 135 percent increase in
the revenue which is mainly due to the business
acquired of Espotting during the year. The different
accounting policies are present for the acquiring firm
and the acquired firm. The company has recorded
certain premature revenues for the amount which
advertisers had made only the advance deposit. As
result, the company is recognizing the vendor financing
as revenue. In some places, the gross revenue has
been recognized while in another, the net revenue has
been recognized. The network click revenue is
recognized at gross level while the private level
revenue is taken at net level. Some of the revenue
expenditures have been recognized as the capital
expenditures.
Revenue for set up network fee is treated as deferred
revenue and is recognized over a period of time. The
company is very inconsistent with regards to its
accounting policies in terms of recognition of revenue.
The provision and treatment of amount for doubtful
debt is also not satisfactory. When a customer clicks on
a sponsored advertisement, the whole of the revenue
due to him is recognized. The company is having a very
high amount of doubtful debt balance at the end of the
year ending December 31, 2004.

-----------------------------------------------------

FIN 370 Week 3 Risk and Return Problem Sets (7-21,7-

27,8-19,8-21,9-33)

FOR MORE CLASSES VISIT

www.fin370genius.com
FIN 370 Week 3 Risk and Return Problem Sets
Complete the following problem sets from Chapter 7 in
Microsoft Excel: 7-21 7-27 Complete the
following problem sets from Chapter 8 in Microsoft
Excel Week 7 DQ 1
Due Tuesday, Day 2
Post your answer to Study Question 5.2 on p. 180 (Ch.
5). As you read your classmates responses, consider
the following scenario: If you compared two different
companies that utilized two different valuation
methods, how might the quality of the results differ?
Also, comment on the difficulty of making comparisons
between two firms that use different valuation
methods.

Understanding the different inventory methods is

crucial. First the person that establishes the inventory
needs to determine which method to use. LIFO, or
FIFO. LIFO means Last in First Out. This means that
when a purchase is made, and sales are recorded the
newest product is used first. So if I bought 10 combs at
$2 on December 1st, and then I buy 5 combs at $2.50
on December 10th. When sales are made I am going
to record sales using the $2.50 until I sell through the 5
combs that were purchased on the 10th, and then the
cost will go to the previous purchase price of $2 until
those 10 combs are sold through. FIFO is just the
opposite. Meaning that goods are used in the order
that they are received. The first items ordered, are the
first items sold. Either method will pass an audit. It is
important to note though that managers can't switch
back and forth between the two methods. Profit will
vary depending on which method is being used. Say
you sold only 6 combs at $3 each. Using the LIFO
method this would equal $3.50 profit. If you used the
FIFO method, this would result in a $6.00 profit.
Response 2
Post your answer to Study Question 5.2 on p. 180 (Ch.
5). As you read your classmates responses, consider
the following scenario: If you compared two different
companies that utilized two different valuation
methods, how might the quality of the results differ?
Also, comment on the difficulty of making comparisons
between two firms that use different valuation
methods.
It is very important to understand which inventory
valuation method is being used to determine the profit
numbers quality. The balance sheet, statement of cash
flow and income statement can be directly impacted by
the valuation method that used to determine the costs
of inventory. The three methods that are used are FIFO,
LIFO and Average Cost. The valuation ratios can be
dramatically affected depending on the inventory
valuation that is being used over a long-term period;
especially because prices are likely to rise. When using
FIFO you can increase net income, but then at the
same time raise the amount taxes that business is
obligated to pay. When using LIFO the inventory can be
obsolete because they are old this will result in lower
net revenue because the products pricing is higher. The
Average Cost results usually fall between LIFO and
FIFO. The bottom line can be affected mainly by the
inventory analysis and the ratio results that are formed
from that analysis. It is easier to compare companies
that are in the same line of business, so I believe that
quality of results would differ tremendously if different
valuation methods were used. If you use LIFO that
company may seem unattractive but they are
performing well, as for FIFO it may look good as for
profit, but may not be performing well.

DQ 2
Week 7 DQ 2
Due Thursday, Day 4

Post your answer to Study Question 5.6 on p. 180 (Ch.

5). Discuss the consequences of poor quality reporting.
What has the U.S. government done to improve the
quality of reporting after recent financial scandals such
as Enron?

I think that the significance is that the analysts only

see this one HUGE transaction. The events that
actually led up to this large transaction actually took
place over a 2 year period. These items should have
been written off as they occurred. Wall Street would
not have known that the executives refused to write off
these accounts when they should have. Wall Street
only see's the one large transaction. If the company
would have been more honest in their reporting they
would have seen (more than likely) that there were
many accounts over a two year period that should have
been written off at different periods. So the analysts
would not have seen a pattern of recurring write-
offs. If the analysts only see the one transaction they
are less likely to be able to paint an accurate picture of
the financial standing of the business for investors, or
potential investors. If the investors could see that
there were many accounts that had to be written off
maybe their investing decisions would have been
different. The regulation of the accounting field has
grown by leaps and bounds since the Enron
scandal. The government has implemented several
agencies and regulations to ensure honesty in
accounting practices. SOX is one example of an agency
that has been put into place to ensure honesty in
accounting. SOX implements things like internal
controls, and accountability for CEO's and CFO's.

Response 2
I believe the impact and importance of this write-off
event is a very big matter. It is obvious how they
handled it that it was a scandal from the start. I think
that everyone involved had a big role in how things
played out. To me I think of the investors as a really
big hit to this but also feel that audit committees have
to be held responsible as well. It has been shown over
many examples that adit oversights are happening to
financial reporting. Although I do feel they are getting
better and tighter due to conforming tightly with the
GAAP requests. I feel over time the accounts
receivable should have been written off in smaller
increments and not all taken by $405 million at once.
Maybe that isn't correct but it would have been easier I
would think to take the receivables over time.

Response 3
Wall Street should have read the footnotes and seen
that the write off was for accounts receivables and
should have been reported in the allowance for
doubtful accounts. Every company that allow sales on
credit face doubtful accounts; therefore, the write off
may reoccur. The significance of this transaction is that
WorldCom want to cover up the $405 million dollars
that it was unable to collect from its customers, but
WorldCom wrote off a large sum of money rather
recording the write-off as needed and the analyst over
looked it. Depending on how the company policy is for
writing off accounts, from 1998 to the 3rd quarter in
2000 is 11 quarters. If the company wrote off bad
accounts quarterly it should have wrote off
36,818,181.82 per quarter. Investors would not want to
continue to invest into a company that has poor
collection skills, or poor management. Unusual items
are simply for those items that are not recurring
operating expenses. Bad debts do not fall under this
category. Since the Enron and WorldCom scandals
many rules and regulations have been put in place by
the government such as SOX. More people are being
held accountable for their actions and consequences
follow poor quality reporting such as fudging the
books.
-----------------------------------------------------

FIN 370 Week 3 Team Assignment Precision Machines

Part 1 (annotated bibliography and excel calculation)

FOR MORE CLASSES VISIT

www.fin370genius.com
This Tutorial contains both annonated bibliography and
excel file FIN 370 Week 3 Team Assignment Precision
Machines Part 1 Precision Machines is preparing a
financial plan for the next six months to determine the
financial needs of the company.

Presenting to Stakeholders
Axia College of University of Phoenix
Presenting to Stakeholders
Financial statements provide insight into the
companys current status and lead to the development
of policies and strategies for the future (Axia, 2007).
Financial statements and notes to the financial
statements should be used to analyze the company.
For instance, what do the financial statements reveal
about why the company has requested a loan or
purchased items on credit? What is the firms capital
structure and what does the firm have outstanding?
How well can the company pay back debt? What
recourses are used to pay debt? What is the companys
performance record and are there any future
expansions? What are the expected returns and how
successful is the company compared to industry
averages? Which areas of operations contributed to the
companys success, and what are the strengths and
weaknesses of the company? What changes can be
made to improve the future performance of the
company?
Key financial ratios will assist in determining the
information requested. Liquid ratios measure a firms
ability to meet cash needs as they arise. The current
ratio is a good tool to use because it measures the
ability the firm has to pay debts when due. The current
ratio for REC is at 2.4 times for 2007, although it is
down from 2006 the company is still able to pay
current debt when due. Cash flow ratio considers cash
flow from operating activities has increased from 2006,
and this indicates an improvement in short-run
solvency. Average collection period has gone down 5
days within the last year. The cash conversion cycle
gives in-site on why the cash flow has improved or
decreased, in this case the conversion period for REC
has improved by 26 days.
Activity ratios measure the liquidity of specific assets
and the efficiency of managing assets. Accounts
payable turnover is up seven times from the prior year
and inventory turnover is also up .25 from last year.
Accounts payable turnover is down 9.05 from 12.10 in
2006. This means that the company is taking longer to
repay payables. The fixed asset turnover and total
asset turnover ratios are used to assess managements
skills in generating sales from investments in assets.
The fixed asset turnover has dropped slightly, but the
total asset turnover has risen slightly. The increase in
total asset turnover comes from improvements in
inventory and accounts receivable turnover.
Leverage ratios measure the extent of a firms
financings with debt relative to equity and its ability to
cover interest and other fixed charges (Axia, 2007).
Debt ratio, long-term debt to total capitalization and
dept to equity have all raised slightly implying a slightly
riskier capital structure. The times interest earned and
the cash interest coverage have increased since 2006.
The interest payments can be covered 7.4 times this
year. The cash interest has improved due to the
operating profits and cash from operations. The fixed
coverage ratio is also important in cases where
companies use operating leases. In this case, the fixed
charges have increased slightly.
Profitability ratios are used to measure the overall
performance of a firm and its efficiency in managing
assets, liabilities, and equity. The ratios used are the
gross profit margin, operating profit margin and net
profit margin. All of which have improved for REC. As
well as the cash flow margin, return on total assets,
return on equity and cash return on assets. Over all the
company seems to be in well financial standings and
looking toward a profitable year.

Reference
Axia College. (2007). The Analysis of Financial
Statements. Retrieved June 28, 2010,
from Axia College, Week Eight, ACC 230.
-----------------------------------------------------

FIN 370 Week 4 Cash Flow AnalysisFrank Smith

Plumbing (calculation and 2 Papers)

FOR MORE CLASSES VISIT

www.fin370genius.com
This tutorial includes both calculation and 2 Papers FIN
370 Week 4 Cash Flow Analysis Analyze the case study,
Frank Smith Plumbing. Analyze the Frank Smith
Plumbings Financial Statement spreadsheet Analysis
of Scenarios:

Debt Scenario would increase the debt ratios from to

50%. Equity Scenario would reduce the debt ratio to
40%. With Debt option, earnings per share would be
higher. Interest declines to 2.86 times with the Debt
option while times interest earned increases to 3.75
times with the Equity option. Either option exhibits a
good use of financial leverage because for both, the
financial leverage index being greater than 1.
However, it is higher using the Debt option.

-----------------------------------------------------

FIN 370 Week 5 Team Assignment Precision Machines

Part 2 (Cash Budget and Strategic Analysis)

FOR MORE CLASSES VISIT

www.fin370genius.com
FIN 370 Week 5 Precision Machines Part 2 Note: There
are two parts to this learning team assignment; Part 1
was completed in Week 3. Review the Precision
Machines document and spreadsheet.
Interpreting Financial Ratios

Luna Lighting, a retail firm, has experienced modest

sales growth over the past three years
but has had difficulty translating the expansion of sales
into improved profitability. Using
three years financial statements, you have developed
the following ratio calculations and
industry comparisons. Based on this information,
suggest possible reasons for Lunas profitability
problems.

Industry

2009 2008 2007 2009

Current 2.3X 2.3X 2.2X
2.1X
Average collection period 45 days 46 days 47 days
50 days
Inventory turnover 8.3X 8.2X
8.1X 8.3X
Fixed asset turnover 2.7X 3.0X
3.3X 3.5X
Total asset turnover 1.1X 1.2X
1.3X 1.5X
Debt ratio 50% 50% 50%
54%
Times interest earned 8.1X 8.2X
8.1X 7.2X
Fixed charge coverage 4.0X 4.5X
5.5X 5.1X
Gross profit margin 43% 43% 43%
40%
Operating profit margin 6.3% 7.2%
8.0% 7.5%
Net profit margin 3.5% 4.0% 4.3%
4.2%
Return on assets 3.7% 5.0% 5.7%
6.4%
Return on equity 7.4% 9.9% 11.4%
11.8%

Based on this information, some possible reasons for

Lunas profitability problems are suggested as under:
a) Net Profit margin of the company has degraded
and this might be due to decrease in the net
income of the company due to increase in
expenses. This needs to be improved upon by cost
control and cost reduction.
b)Return on equity of the company has degraded
further and this also indicates that there is a
decrease in the net income of the company due to
increase in expenses. This needs to be improved
upon by cost control and cost reduction.
c) Fixed charge coverage has fallen, which means
that the debt payment along with interest might
have increased and this will also lead to decrease
in the net income of the company and thus
degrading the profitability position of the company.
d)Operating profit margin has dropped even though
gross profit margin has remained constant. It
means that the operating expenses are higher and
 need to e controlled to improve the profitability of
the company.
e) The fixed assets turnover and the return on assets
have also degraded; this also indicates decrease in
the net income of the company.