Chapter 29 Financial Planning 763
bre44380_ch29_759-786.indd 763 10/06/15 09:53 AM
cash are shown as negative numbers. Dynamic’s cash flow statement shows that Dynamic
generated cash from the following sources:
- It earned $60 million of net income (operating activity).
- It set aside $20 million as depreciation. Remember that depreciation is not a cash
outlay. Thus, it must be added back to obtain Dynamic’s cash flow (operating activity). - It reduced inventory, releasing $5 million (operating activity).
515
320
80
240
110
25
25
150
125
325
575
350
100
250
0
135
135
90
350
575
0
20
125
130
275
25
135
60
320
515
Current liabilities:
Total current liabilities
Long-term debt
Net worth (equity and retained earnings)
Total liabilities and net worth
Bank loans
Accounts payable
Gross investment
Less depreciation
Cash
Marketable securities
Accounts receivable
Inventory
Total current assets
Fixed assets:
Net fixed assets
Total assets
Current assets:
(^20152014) ❱ TABLE 29.2
Year-end balance sheets
for 2015 and 2014 for
Dynamic Mattress
Company (figures in $
millions).
❱ TABLE 29.3^ Statement of
cash flows for Dynamic Mattress
Company, 2015 (figures in $
(^20) millions).
60
- 25
5
25
85 - 30
- 30
30
- 25
- 25
- 50
5
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Increase (decrease) in accounts payable
Net cash flow from operating activities
Cash flows from investing activities:
Investment in fixed assets
Cash flows from financing activities:
Sale (purchase) of marketable securities
Increase (decrease) in long-term debt
Increase (decrease) in short-term debt
Net cash flow from financing activities
Increase (decrease) in cash balance
Depreciation
Net income
Dividends
Cash flows from operating activities: