Exhibit 6.32 presents a statement of cash flows for Swoosh Shoes, Inc., for three years. a. Why
Question:
a. Why did Swoosh experience increasing net income but decreasing cash flow from operations during this three-year period?
b. What is the likely explanation for the changes in Swooshs cash flow from investing during the three-year period?
c. How did Swoosh finance its investing activities during the three-year period?
d. Evaluate the appropriateness of Swooshs use of short-term borrowing during2013.
2013 2012 2011 OPERATIONS S 243 17 167 15 34 Other Addbacks and Subtractions..*... Working Capital Provided by Operations. . 324 (Increase) Decrease in Accounts Receivable.... (120) (Increase) Decrease in Inventories. ..(275) (Increase) Decrease in 0ther Operating Current Assets Increase (Decrease) in Accounts Payable ..59 Increase (Decrease) in Other Current 265 (105) (86) (38) (25) 36 21 Operating Liabilities. 32 36 S 127 S 169 INVESTING Sale of Property, Plant, and Equipment...w.... 2 Acquisition of Property, Plant, and Equipment.(165) 48 $(211) (87) (42) Cash Flow from Investing . . $ (89 S (40 FINANCING Increase in Short-Term Debt....*.... 269 Decrease in Short-Term Debt.*... (96) (10) Dividends..PWO 26 Cash Flow from Financing . . ...226 119 $ 10 74 5 84 S 89
Step by Step Answer:
a Swoosh Shoes growth in sales and net income led to increases of account receivable and inventories ...View the full answer
Financial Accounting An Introduction to Concepts, Methods and Uses
ISBN: 978-1133591023
14th edition
Authors: Roman L. Weil, Katherine Schipper, Jennifer Francis
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In order to determine the amount of cash created by operating operations, the indirect technique for preparing the statement of cash flows entails adjusting net income with changes in balance sheet.
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