Flanders Corporations 2014 income statement and comparative balance sheet as of June 30, 2014 and 2013 follow.
Question:
Flanders Corporation’s 2014 income statement and comparative balance sheet as of June 30, 2014 and 2013 follow.
The following is additional information about 2014: (a) equipment that cost $48,000 with accumulated depreciation of $34,000 was sold at a loss of $8,000; (b) land and building were purchased in the amount of $200,000 through an increase of $200,000 in the mortgage payable; (c) a $40,000 payment was made on the mortgage; (d) the notes were repaid, but the company borrowed an additional $60,000 through the issuance of a new note payable; and (e) a $120,000 cash dividend was declared and paid.
REQUIRED
1. Use the direct method to prepare a statement of cash flows. Include a supporting schedule of noncash investing and financing transactions. Do not include a reconciliation of net income to net cash flows from operating activities.
2. What are the primary reasons for Flanders’ large increase in cash from 2013 to 2014?
3. Compute and assess cash flow yield and free cash flow for 2014. (Round to one decimal place.)
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty