Select TRUE if the statement is correct and FALSE if incorrect. 1. Miller Orr Model is a tool to determine the exact amount of cash needed by the business and it assumes fixed amount of cash through out the operating cycle. * 2. A company buys marketable securities when the cash outflows exceed the cash inflows. * 3. There is no cost in holding large amounts of cash for business operations. *

Select TRUE if the statement is correct and FALSE if incorrect. 1. Miller Orr Model is a tool to determine the exact amount of cash needed by the business and it assumes fixed amount of cash through out the operating cycle. * 2. A company buys marketable securities when the cash outflows exceed the cash inflows. * 3. There is no cost in holding large amounts of cash for business operations. *

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter5: Income Statement: Reporting The Results Of Operating Activities

Section: Chapter Questions

Problem 10Q

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Globo-Chem Co. reported net sales of $600 million last year and generated a net income of $132.00 million. Last year's accounts receivable increased by $17 million. What is the maximum amount of cash that Globo-Chem Co. received from sales last year? $583.00 million O$291.50 million $437.25 million O $149.00 million
TRUE OR FALSE 1. Cash flows are always certain in whatever type of industry the business belongs to. 2. Miller Orr Model is a tool to determine the exact amount of cash needed by the business and it assumes the fixed amount of cash throughout the operating cycle. 3. Any excess of cash beyond the upper limit will be used for investment in marketable securities.
6. Free cash flow Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash position. Which of the following statements best describes free cash flow? O The amount of a firm's available cash that can be used without harming operations or the ability to produce future cash flows O The amount of a firm's available cash used to write off capital expenditures and depreciation Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update as…
1. Describe the two of the asset categories in working capital. 2. Why is working capital so important?3. A growing business typically has cash flow problems because profits tend to be reinvested back into the business. Describe how you would solve that.4. What role does inventory management play in an overall business plan and describe the benefits of just in time inventory management.5. Describe one of the methods for managing cash disbursements or cash receipts and how it impacts profitability.
2. Why is working capital so important?3. A growing business typically has cash flow problems because profits tend to be reinvested back into the business. Describe how you would solve that.4. What role does inventory management play in an overall business plan and describe the benefits of just in time inventory management.5. Describe one of the methods for managing cash disbursements or cash receipts and how it impacts profitability.
. Free cash flow Accounting statements represent a company’s earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company’s real cash position. Which of the following statements best describes free cash flow? Residual cash flow after taking into account operating cash flows, including fixed-asset acquisitions, asset sales, and working-capital expenditures Cash flows generated by operating the business Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update…
Read the article “Why Cash Management Is Key to Business Success.” After reading, answer the following questions: 1) What happens when a business is unable to generate enough cash? 2) What does the article have to say about accounts receivable, accounts payable, and inventories? 3) Is it bad for a company to have too much cash? Justify your answer.
TRUE OR FALSE 1. The lower the amount of cash needed, the lower the transaction cost. 2. The longer the operating cycle of a business, the more a business needs cash for its operations. 3. Baumol Model incorporates the variability of cash flows depending on the seasonality of need.
Accounting statements represent a company’s earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company’s real cash position. Which of the following statements best describes free cash flow? The excess cash generated by revenues less all operating expenses Based on your evaluation you have (103,379,107,069,111,989,152,579) in free cash flow. Can a company have negative free cash flow? No Yes The cash flow available for distribution to all investors after the company has made all investments in fixed assets and working capital necessary to sustain a firm’s ongoing operations Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You…
Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash position. Which of the following statements best describes free cash flow? O The amount of a firm's available cash used to write off capital expenditures and depreciation O The amount of a firm's available cash that can be used without harming operations or the ability to produce future cash flows Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update as of June 15 • Your…
Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash position. Which of the following statements best describes free cash flow? The amount of a firm's available cash that can be used without harming operations or the ability to produce future cash flows The amount of a firm's available cash used to write off capital expenditures and depreciation Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: • Your existing business generates…
“Cash Is King” for all businesses You can determine a company’s cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. Which of the following is true for the statement of cash flows? It reflects revenues when earned. It reflects cash generated and used during the reporting period. A. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Operating Activity Investing Activity Financing Activity A company records a loss of $70,000 on the sale of its outdated inventory. D and W Co. sells its last season’s inventory to a discount store. Yum…