Financial Accounting & Analysis
Q1. Company ABC, a manufacturing company, is preparing its cash flow statement for the fiscal year ending December 31, 2023. The company experienced various cash inflows and outflows during the year from its operating, investing, and financing activities. Based on the provided data, calculate the net cash provided by operating activities, investing activities, and financing activities for Company ABC for the fiscal year ending December 31, 2023. Additionally, determine the net increase or decrease in cash and cash equivalents for the period.
|
Category |
Amount (₹) |
|
Net Income |
₹500,000 |
|
Depreciation Expense |
₹100,000 |
|
Increase in Accounts Receivable |
₹50,000 |
|
Decrease in Inventory |
(₹30,000) |
|
Increase in Accounts Payable |
₹20,000 |
|
Purchase of Property, Plant, and Equipment |
(₹200,000) |
|
Proceeds from Issuance of Long-term Debt |
₹300,000 |
|
Repayment of Long-term Debt |
(₹150,000) |
|
Payment of Dividends |
(₹50,000) |
|
Beginning Cash and Cash Equivalents |
₹400,000 |
Instructions:
1. Calculate the net cash provided by operating activities using the indirect method.
2. Determine the net cash used in investing activities.
3. Determine the net cash provided by financing activities.
4. Calculate the net increase or decrease in cash and cash equivalents.
5. Provide the final cash flow statement for Company ABC for the fiscal year ending December 31, 2023, showing the net cash provided by (or used in) each category and the net increase or decrease in cash and cash equivalents.
Note: Assume all transactions are cash transactions unless otherwise specified and use the indirect method for operating activities.
Q2. DEF Pvt. Ltd. is considering introducing a new product line. Conduct a cost- volume-profit (CVP) analysis on hypothetical data (per unit basis) to determine the breakeven point and assess the profitability of the new product. Discuss the implications of your analysis on the company's decision-making process. (You can present the answer with the help of hypothetical data if required).
Q3. (A) Compare and contrast ratio analysis with other techniques of financial analysis. Provide examples of situations where each technique would be most appropriate and discuss the insights, they offer to stakeholders in assessing a company's financial performance and position.
Q3. (B) You are a newly appointed financial analyst at a manufacturing company, tasked with preparing the balance sheet for the fiscal year ending December 31, 2023. As part of your role, you need to identify and explain the basic concepts underlying the preparation of the balance sheet. Additionally, you are required to discuss the key components of a balance sheet and their role in portraying the financial position of a company.