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FIN 350 Week 3 Complete


FIN 350 Week 3 Module 3 Practice Problems

P4–5 Classifying inflows and outflows of cash Classify each of the following items as an inflow (I) or an outflow (O) of cash, or as neither (N).

P4–6 Finding operating and free cash flows Consider the following balance sheets and selected data from the income statement of Keith Corporation.

a. Calculate the firm’s net operating profit after taxes (NOPAT) for the year ended December 31, 2015, using Equation 4.1.

b. Calculate the firm’s operating cash flow (OCF) for the year ended December 31, 2015, using Equation 4.3.

c. Calculate the firm’s free cash flow (FCF) for the year ended December 31, 2015, using Equation 4.4.

d. Interpret, compare, and contrast your cash flow estimates in parts b and c.

P4–9 Cash budget: Basic Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000, respectively. The firm has a cash balance of here $5,000 on May 1 and wishes to maintain a minimum cash balance of $5,000. Given the following data, prepare and interpret a cash budget for the months of May, June, and July.

(1) The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second FIN 350 Week 3 Complete month following sale.

(2) The firm receives other income of $2,000 per month.

(3) The firm’s actual or expected purchases, all made for cash, are $50,000, $70,000, and $80,000 for the months FIN 350 Week 3 Complete of May through July, respectively.

(4) Rent is $3,000 per month.

(5) Wages and salaries are 10% of the previous month’s sales.

(6) Cash dividends of $3,000 will be paid in June.

(7) Payment of principal and interest of $4,000 is due in June.

(8) A cash purchase of equipment costing $6,000 is scheduled in July.

(9) Taxes of $6,000 are due in June.

FIN 350 Grand Canyon Week 3 Complete Work

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