Exhibit 1 Sources and Uses of Funds, November 30, 1978-August 13, 1979 (Thousands of Dollars)
Exhibit 1 Sources and Uses of Funds, November 30, 1978-August 13, 1979 (Thousands of Dollars)
Exhibit 1 Sources and Uses of Funds, November 30, 1978-August 13, 1979 (Thousands of Dollars)
Sources
Increase in bank debt $1,000
Increase in retained earnings 883
Decrease in cash 961
Increase in customer advances 726
Increase in accounts payable 600
Decrease in accounts receivable 561
Increase in taxes payable 329
Decrease in net fixed assets 92
Decrease in prepaid expenses 20
Total sources $5,172
Uses
Stock repurchase $3,000
Increase in inventories 2,163
Decrease in accruals 9
Total uses $5,172
Hampton Machine Tool
Company
• Why can’t a profitable firm like Hampton repay its loan
on time and why does it need more bank financing?
(Hints: Prepare a cash flow statement and get the
answer)
• Whether Hampton will be able to repay a larger loan in
December? (Hints: Prepare a cash budget)
• Should the bank make the loan? Why or why not?
• Any suggestion regarding the loan?
•
• Exhibit 1. Cash Flow Statement
Cash flow from operating activities:
1. Increase in retained earnings 883
2. Add, Depreciation (3090 – 2998) 92
975
Add: Decrease in A/R (1245 – 684) 561
Decrease in Prepaid expense (62 – 42) 20
Increase in A/P (948 – 348) 600
Increase in Tax Payable (479 – 150) 329
Increase in Customer Adv (1566 – 840) 726
2236
3211
Less: Increase in inventory (4764 – 2601) 2163
Decrease in Accruals (561 – 552) 9
2172
CASH FLOW FROM OPERATING 1039
ACTIVITIES