PaperlinX Limited, an Australian paper manufacturer using IFRS, reported the following in the operating activities section of

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PaperlinX Limited, an Australian paper manufacturer using IFRS, reported the following in the operating activities section of its statement of cash flows:

PaperlinX Limited, an Australian paper manufacturer using IFRS, reported the

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PaperlinX Limited, an Australian paper manufacturer using IFRS, reported the

Instructions
(a) Is PaperlinX using the direct or indirect method when preparing its operating activities? Explain why you named the method you did.
(b) Does IFRS require or recommend the use of one method over another when preparing the operating activities section of a statement of cash flows?
(c) Identify any possible classification differences that an analyst should be aware of before comparing PaperlinX's statement of cash flows with that of another company, whether in Australia or any other country.
(d) Calculate PaperlinX's cash current debt coverage, cash total debt coverage, and free cash flow for 2010 and 2009. Comment on any changes in the company's liquidity and solvency based on these measures.

Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...
Free Cash Flow
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...
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Related Book For  book-img-for-question

Financial Accounting Tools for Business Decision Making

ISBN: 978-1118024492

5th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

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