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Chemalite 1992 Cash Flow Analysis

The document provides a pro forma cash flow statement for Chemalite Inc. for 1992. It shows cash flows from operating, investing, and financing activities. The main sources of cash included sales, sale of machinery, long-term debt, and short-term debt. The main uses of cash were expenses, purchase of new machinery, purchase of a new production facility, treasury stock, and dividends paid. The document also recommends reducing accounts receivable collection time, finished goods inventory levels, and looking for cheaper sources of raw materials and supplies.

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Gui Guerra
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80 views8 pages

Chemalite 1992 Cash Flow Analysis

The document provides a pro forma cash flow statement for Chemalite Inc. for 1992. It shows cash flows from operating, investing, and financing activities. The main sources of cash included sales, sale of machinery, long-term debt, and short-term debt. The main uses of cash were expenses, purchase of new machinery, purchase of a new production facility, treasury stock, and dividends paid. The document also recommends reducing accounts receivable collection time, finished goods inventory levels, and looking for cheaper sources of raw materials and supplies.

Uploaded by

Gui Guerra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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7/18/2019 Chemalite Inc.

Case Study Solution

1 Proforma Cash Flow Statement of Chemalite for 1992 (In


Particulars

Operating Cash Flow


Net Income
(+) Depreciation
Amortization of Patent
Depreciation of Inventory
Increase in DTL
(-) Increase in A/R
Increase in Raw Materia Inventory
Increase in !inis"e# $oo#s Inventory
Increase in Prepai# Ins%rance
Decrease in Ta&es Paya'e
$ain on ae of Mac"ines
Net Cash Flow from Operation cti!ities

Investing Cash Flow


(+) Receipts from ae of Mac"ines
(-) P%rc"ase of New Mac"ines
P%rc"ase of New Pro#%ction !aciity
Net Cash Flow from In!estin" cti!ities

Financial Cash Flow


(+) Lon term #e'ts
"ort term #e'ts

(-) Treas%ry
Divi#en#stoc*
Pai#
Net Cash Flow from Financin" cti!ities

Openin" Cash #alance


Net Cash Flow
Closin" Cash #alance

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7/18/2019 Chemalite Inc. Case Study Solution

irect Method)
mount
Claculations

  ,,.0 Mac"ine 12  3,3.044


 5,.530 Mac"ine so# at  3,0.044
 30.444 Depriciation/year  3,.304
 0.444
 35.674 Pro#%ction !aciity  04.444
 -64.474 Lan#  304.444
 -34.804 1%i#in  544.444
 -,48.54 Depriciation/year  0.444
 -50.444 P, 3  830.444
 -04 P3 8  ,8,.556
 -38.304 P7 0  ,8,.556
$ %&'1 P7 5  ,8,.556

New Ma"cines  034.444


 3,0.044 Depriciation/year  03.444
 -034.444
 -830.444 No9 of "ares 34.444
$ %*29+ Price/"are  ,97
Rep%rc"ase "ares  35.444

 0,4.444 LTD  0,4.444 ,4:


  344.444 TD  344.444


 -35.444
-,4.444 , Divi#en#  4943  ,4.444
$ ,*& 3 Divi#en# ,4:
;ommon toc* 044444
 $ 11-
$ %1-+1
$ 9&9

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7/18/2019 Chemalite Inc. Case Study Solution

2 Proforma Cash Flow Statement of Chemalite for 1992 (.i


Particulars

Operating Cash Flow


(+) ;as" Receive# from aes
(-) <&penses
Raw Materia
!inise# $oo#s Inventory
(-) La'o%r
Ins%rance
Rent
=tiities
A#vertisin
>A <&penses
Interest <&pense
R>D <&penses

 Ta& <&pense
Net Cash Flow from Operation cti!ities

Investing Cash Flow


(+) Receipts from ae of Mac"ines
(-) P%rc"ase of New Mac"ines
P%rc"ase of New Pro#%ction !aciity
Net Cash Flow from In!estin" cti!ities

Financial Cash Flow


(+) Lon term #e'ts
"ort term #e'ts
(-) Treas%ry toc*
Divi#en#s Pai#
Net Cash Flow from Financin" cti!ities

Openin" Cash #alance


Net Cash Flow
Closin" Cash #alance

- Main sources and uses of cash


Sources
;as" from aes
;as" from aes of Mac"ines
Lon Term De't
"ort Term De't

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& /ecommendations

A Re#%ce cre#it time of 'orrowers from 84 #ays to 74 #


1 Re#%ce inventory of @nis"e# oo#s9 Manaement to #
; Loo* to so%rce raw materia an# ot"er s%ppies on cre

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  rect Method)
mount
Claculations

  ,.,5.334 Mac"ine 12  3,3.044


Mac"ine so# at  3,0.044
 -867.,04 Depriciation/year  3,.304
 -.54
 -554.444 Pro#%ction !aciity  04.444
 -6.044 Lan#  304.444
 -30.444 1%i#in  544.444
 -3.444 Depriciation/year  0.444
 -64.444 P, 3  830.444
 -,0.604 P3 8  ,8,.556
 -0.604
 -57.304

 -7.,04
$ %&'1 P7 0  ,8,.556
P7 5  ,8,.556

 3,0.044 New Ma"cines  034.444


 -034.444 Depriciation/year  03.444
 -830.444
$ %*29+ No9 of "ares 34.444
Price/"are  ,97
Rep%rc"ase "ares  35.444
 0,4.444
 344.444 LTD  0,4.444 ,4:
  -35.444 TD  344.444
 -,4.444
$ ,*& , Divi#en#  4943  ,4.444
3 Divi#en# ,4:
 $ 11- ;ommon toc* 044444
 $ %1-+1
$ 9&9

0ses
  ,.,5.344 P%rc"ase of New Mac"ines  034.444
 3,0.044 P%rc"ase of New !aciity  830.444
 0,4.444 Raw Materia  867.,04
 344.444 La'o%r  554.444
>A <&penses  ,0.604

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7/18/2019 Chemalite Inc. Case Study Solution

ys. t"ere'y increasin cas" ?ow. re#%cin A/R an# re#%cin s"ort term 'orrowin
eci#e an optim%m eve9 =nso# pro#%cts increases opport%nity costs an# re#%ces
#it9 T"is wi "ep to maintain cas" ?ow at @rms en#9

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 ia'iities
cas" ?ow9

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