Chemco Coatings Case Study

Question 1: Using the given income statement and balance sheet data, I've generated a cash-based income statement for Chem-Co for 2005 below.

Chem-Co

Jennifer Haggerty 2005

CASH BASED INCOME STATEMENT $ 1,000,000 Cash Flow Impact

Net sales 861 Source Revenue

Change in accounts receivable (113) Use Asset Increase

Cash receipts from sales 748

Cost of goods sold (680) Use Expense

Change in inventory (39) Use Asset Increase

Change in accounts payable 17 Source Liability Increase

Cash purchases (702)

Cash margin 46

Total operating expenses (150) Use Expense

Depreciation & amortization 26 Source Noncash Expense

Change in prepaid expenses 3 Source Asset Decrease

Change in accruals 7 Source Liability Increase

Change in other current assets & liab. 0

Cash operating expenses (114)

Cash operating profit (68)

Interest on marketable securities 6 Source Revenue

Income on long term investments 0

All other expenses & income (net) 0

Cash before interest & taxes (62)

Interest expense - Bank notes 0

Interest expense - Term notes and LTD (18) Use Expense

Income taxes reported (5) Use Expense

Change in income tax payable 1 Source Liability Increase

Change in deferred income taxes 0

Cash flow from operations (CFO) (84)

Capital exp. and leasehold improvements (38) Use Asset Increase

Change in long-term investments 0

Change in intangible assets 1 Use Asset Increase

Change in other noncurrent assets 0

Cash Used for Investments (37)

Payment for last period's CM Term note 0

Payment for last period's CMLTD (9) Use Payment For Financing

Dividends paid (DIV) 0

Payments for financing (9)

Cash before external financing (130)

Change in short-term bank debt 117 Source Liability Increase

Change in term notes