Luo Ltd. had the following statement of financial position at December 31, 2018 (amounts in thousands). During
Question:
Luo Ltd. had the following statement of financial position at December 31, 2018 (amounts in thousands).
During 2019, the following occurred.
1. Luo liquidated its non-trading equity investment portfolio at a loss of ¥5,000.
2. A tract of land was purchased for ¥38,000.
3. An additional ¥30,000 in ordinary shares were issued at par.
4. Dividends totaling ¥10,000 were declared and paid to shareholders.
5. Net income for 2019 was ¥35,000, including ¥12,000 in depreciation expense.
6. Land was purchased through the issuance of ¥30,000 in additional bonds.
7. At December 31, 2019, Cash was ¥70,200, Accounts Receivable was ¥42,000, and Accounts Payable was ¥40,000.
Instructions
a. Prepare a statement of cash flows for the year 2019 for Luo.
b. Prepare the statement of financial position as it would appear at December 31, 2019.
c. Compute Luo's free cash flow and the current cash debt coverage for 2019.
d. Use the analysis of Luo to illustrate how information in the statement of financial position and statement of cash flows helps the user of the financial statements.
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Step by Step Answer:
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield