Interpreting the statement of cash flows

Reference no: EM131135417

INTERPRETING THE STATEMENT OF CASH FLOWS. Montgomery Ward operates a retail department store chain. It filed for bankruptcy during the first quarter of Year 12. Exhibit 3.27 presents a statement of cash flows for Montgomery Ward for Year 7 to Year 11. The firm acquired Lechmere, a discount retailer of sporting goods

Year 11 Year 10			Year 9	Year 8	Year 7
	OPERATIONS
	Net income	$(237)	$ (9)	$ 109	$ 101
	Depreciation	122	115	109	98	97
	Other addbacks	13	8	24	25	32
	Other subtractions	(197)	(119)	(29)	-	-
	(Increase) Decrease in accounts receivable	(32)	(54)	(38)	(9)	9
	(Increase) Decrease in inventories	225	(112)	(229)	(204)	(38)
	(Increase) Decrease in prepayments	27	(32)	(39)	(58)	36
	Increase (Decrease) in accounts payable	(222)	85	291	148	(17)
	Increase (Decrease) in other
	current liabilities	(55)	(64)	(45)	28	(64)
	Cash Flow from Operations	$(356)	$(182)	$ 153	$ 129	$ 155
	INVESTING
	Fixed assets acquired	$ (75)	$(122)	$(184)	$(142)	$(146)
	Change in marketable securities	20	(14)	(4)	(27)	137
	Other investing transactions	(93)	27	(113)	6	9
	Cash Flow from Investing	$(148)	$(109)	$(301)	$(163)	$ -
	FINANCING
	Increase in short-term borrowing	$ 588	$ 16	$ 144	$ -	$ -
	Increase in long-term borrowing	-	205	168	100	-
	Issue of capital stock	3	193	78	1	1
	Decrease in short-term borrowing	-	-	-	-	-
	Decrease in long-term borrowing	(63)	(17)	(275)	(18)	(403)
	Acquisition of capital stock	(20)	(98)	(9)	(11)	(97)
	Dividends	(9)	(4)	(24)	(23)	(19)
	Other	-	-	1	2	2
	Cash Flow from Financing	$ 499	$ 295	$ 83	$ 51	$(516)
	Change in Cash	$ (5)	$ 4	$ (65)	$ 17	$(361)
	Cash-Beginning of year	37	33	98	81	442
	Cash-End of Year	$ 32	$ 37	$ 33	$ 98	$ 81
	Change in sales from previous year	-10.0%	-.5%	+17.2%	+3.7%	+2.0%

and electronic products, during Year 9. It acquired Amoco Enterprises, an automobile club, during Year 11. During Year 10, it issued a new series of preferred stock and used part of the cash proceeds to repurchase a series of outstanding preferred stock. The "other subtractions" in the operating section for Year 10 and Year 11 represent reversals of deferred tax liabilities.

Required

Discuss the relationship between net income and cash flow from operations and between cash flows from operating, investing, and financing activities for the firm over the five-year period. Identify signals of Montgomery Ward's difficulties that might have led to its filing for bankruptcy.

Reference no: EM131135417

Questions Cloud

Write essay on it is difficult to make changes in one life : "It is difficult to make changes in one's life". Do you agree with this statement? -Write a short essay with Introduction, content and conclusion.

About the financial management of her company : (Stewardship and Accountability) The owner of Touring Inc., Mei Chang, is concerned about the financial management of her company. When she started up Touring Inc., a company that provides bus tours in Banff, Alberta, she hired Peter Rosen to mana..

Variable costing income statement : a. Based on the data given, prepare a variable costing income statement for Procter & Gamble Company, assuming that the company maintained constant inventory levels during the period.

Off limit topics include grading and assignments in class : For this assignment, think of something you would like to change at school, where you live, or where you work. It can be a change in a process or how something is completed. You will write a memo to me to persuade me to do what you are asking. Off li..

Interpreting the statement of cash flows : INTERPRETING THE STATEMENT OF CASH FLOWS. Montgomery Ward operates a retail department store chain. It filed for bankruptcy during the first quarter of Year 12. Exhibit 3.27 presents a statement of cash flows for Montgomery Ward for Year 7 to Year..

Block format with closed or mixed punctuation : You work in a bank and need to respond to customer questions and requests received through the mail. A customer's payment was one day late and his account was charged $35 late fee. The customer is asking for a credit of $35 since he thinks it is not ..

Define communication in business : Define communication in business. - State and explain barriers to effective communication. - State ways of achieving effective communication.

Chester meets to determine their investment plan : It is January 2nd and senior management of Chester meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing $10,000,000 in bonds.

How much will be spent to cover the cost of overtime pay : Nurse Ratched is in the process of developing a daily schedule for the emergency staff at Claymoore Hospital. Based on past emergency records she has determined the number of staff needed during each two hour segment of the day as shown in the table ..

User Account

All Pages