Analyzing Clime Custom Bicycle
Chapter 3
Analyzing Cline Custom Bicycles’ Cash Flows
Roxette D. Gonzales
BSBA III- FM A
Darin Cline, formerly an internationally renowned professional bicycle racer, owns and operates Cline Custom Bicycles—a firm that builds and markets custom bicycles to shops throughout the United States. He has just received his firm’s 2000 income statement, balance sheet, and statement of retained earnings. Although he is quite pleased to have achieved record earnings of $ 106, 000 in 2000, Darin is concerned about the firm’s cash flows. Specifically, he is finding it more and more difficult to pay the firm’s cash flows. Specifically, he is finding it more and more difficult to pay the firm’s bills in a timely manner. To gain insight into the firm’s cash flow problems, Darin is planning to have the firm’s 2000 statement of cash flows prepared and evaluated.
Required a. Use the financial data presented to prepare Cline Custom Bicycles’ statement of cash flows for the year ended December 31, 2000.
Cline Custom Bicycles Statement of Cash Flows ($000)
For the Year ended Dec 31, 2000
Cash flow from Operating Activities Net Profit after Taxes $ 106 Depreciation 30 Decrease in Accounts Receivable 30 Increase in Inventories (140) Increase in Accounts Payable 70_ Cash provided by operating activities __96__
Cash flow from Investing Activities Increase in Gross Fixed Assets (40) _ Cash provided by investment activities __ (40) __
Cash flow from Financing Activities Increase in Notes Payable 20 Decrease in Long Term Debt (30) Dividends Paid _ (76) _ Cash provided by financing activities __ (86) __
Net decrease in cash and marketable securities (30)
b. Evaluate the statement prepared in a in light of Cline’s current cash flow difficulties.
Through the preparation of Cash flows for the Cline’s company, we could see that there is a
Analyzing Cline Custom Bicycles’ Cash Flows
Roxette D. Gonzales
BSBA III- FM A
Darin Cline, formerly an internationally renowned professional bicycle racer, owns and operates Cline Custom Bicycles—a firm that builds and markets custom bicycles to shops throughout the United States. He has just received his firm’s 2000 income statement, balance sheet, and statement of retained earnings. Although he is quite pleased to have achieved record earnings of $ 106, 000 in 2000, Darin is concerned about the firm’s cash flows. Specifically, he is finding it more and more difficult to pay the firm’s cash flows. Specifically, he is finding it more and more difficult to pay the firm’s bills in a timely manner. To gain insight into the firm’s cash flow problems, Darin is planning to have the firm’s 2000 statement of cash flows prepared and evaluated.
Required a. Use the financial data presented to prepare Cline Custom Bicycles’ statement of cash flows for the year ended December 31, 2000.
Cline Custom Bicycles Statement of Cash Flows ($000)
For the Year ended Dec 31, 2000
Cash flow from Operating Activities Net Profit after Taxes $ 106 Depreciation 30 Decrease in Accounts Receivable 30 Increase in Inventories (140) Increase in Accounts Payable 70_ Cash provided by operating activities __96__
Cash flow from Investing Activities Increase in Gross Fixed Assets (40) _ Cash provided by investment activities __ (40) __
Cash flow from Financing Activities Increase in Notes Payable 20 Decrease in Long Term Debt (30) Dividends Paid _ (76) _ Cash provided by financing activities __ (86) __
Net decrease in cash and marketable securities (30)
b. Evaluate the statement prepared in a in light of Cline’s current cash flow difficulties.
Through the preparation of Cash flows for the Cline’s company, we could see that there is a