Scribd Logo
Upload

Welcome to Scribd!

  • 56 views

    03 Statement of Cash Flow A III

    Uploaded by

    Milton Stevens
    statement of cashflow, analysis of financial statement analysis

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    03 Statement of Cash Flow A III

    Uploaded by

    Milton Stevens
    56 views6 pages
    statement of cashflow, analysis of financial statement analysis

    Original Title

    03 Statement of Cash Flow a III

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    statement of cashflow, analysis of financial statement analysis

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    56 views6 pages

    03 Statement of Cash Flow A III

    Uploaded by

    Milton Stevens
    statement of cashflow, analysis of financial statement analysis

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 6

    |<

    <

    >

    >|

    Jan Bell Marketing Inc.Statement of Cash Flows


    Jan Bell Marketing Inc. provides fine jewelry, watches and certain other select non jewelry consumer
    products to the value-conscious fashion consumer. The Company markets its products principally
    through Sams Club, a division of Wal-Mart, Inc. (Sams), pursuant to an arrangement whereby the
    Company operates an exclusive leased department at all of Sams existing and future domestic and
    Puerto Rican locations through February 1, 2001. In the Companys fiscal year ended February 3, 1996,
    sales through Sams accounted for approximately 91 % of the Companys net sales.

    y
    p
    n
    o
    o
    i
    t
    C c

    Learning Objectives
    Compare and contrast the direct and indirect methods of preparing the statement of cash flows.
    Understand how to recast operating cash flows from the indirect method to the direct method.
    Understand why most companies choose to use the indirect method.
    Refer to the 1996 financial statements of Jan Bell Marketing Inc.

    Concepts

    u
    d
    e
    l
    o
    r
    p ep
    m
    R
    r
    a
    S t Fo
    o
    N

    a. Which methodthe direct method or the indirect methoddoes the Jan Bell use to prepare its statement of cash flows? How do you know? Describe the differences between the method used by the company and the other, more commonly used, method.
    b. Why do most companies prepare their statement of cash flows on an indirect basis?

    c. A reconciliation of net loss to net cash provided by operating activities is provided immediately after
    the statement of cash flows. The reconciliation includes the following:
    Depreciation and amortization
    $ 8,704
    Provide the journal entry made by Jan Bell to record Depreciation and amortization for the year
    ended February 3, 1996.
    ii. Explain why depreciation is added to the net loss to arrive at cash flow from operations. If Jan Bell
    depreciated its assets more quickly, would the company generate more cash?
    i.

    Analysis

    d. Where does the cash-based equivalent of Net sales appear on Jan Bells statement of cash flows?
    Where does it appear in the reconciliation of Net loss to operating cash flows? Show numerically how
    the net income adjustment works at Jan Bell for the year ended February 3, 1996. (Hint: your analysis
    will be off by $1 due to rounding.)
    e. Where does the cash-based equivalent of Cost of sales appear on Jan Bells statement of cash flows?
    Where does it appear in the reconciliation of Net loss to operating cash flows? (Note: Jan Bell manufactures some of the jewelry it sells.)

    From Cases in Financial Reporting: An Integrated Approach with and Emphasis on Earnings Quality and Persistence, Third Edition, D. Eric Hirst
    and Mary Lea McAnally, Series Editors. Copyright 2001 Prentice Hall, Inc. All rights reserved. No part of this publication may be reproduced
    in any form for any purpose without the written consent of the publisher.

    |<

    <

    >

    >|

    |<

    <

    >

    >|

    JAN BELL MARKETING, INC.


    CONSOLIDATED BALANCE SHEETS
    (Amounts shown in thousands except share and per share data)
    February 3 January 28,
    1996
    1995
    Assets
    Current Assets:
    Cash and cash equivalents
    Accounts receivable (net of allowance
    for doubtful accounts and sales returns of
    $702 and $5,630, respectively)
    Inventories
    Other current assets

    $ 14,955

    y
    p
    n
    o
    o
    i
    t
    C c

    5,855
    95,486
    914

    12,156
    106,053
    1,738

    117,210
    25,943

    148,159
    29,639

    2,685
    7,335

    2,869
    6,085

    $153,173

    $186,752

    $ 6,043
    4,405

    $ 14,249
    10,168

    10,000

    35,000

    20,448

    59,417

    7,500

    Total current assets


    Property, net
    Excess of cost over fair value of
    net assets acquired
    Other assets

    u
    d
    e
    l
    o
    r
    p ep
    m
    R
    r
    a
    S t Fo
    o
    N

    Liabilities and Stockholders Equity


    Current Liabilities:
    Accounts payable
    Accrued expenses
    Senior notes payable
    classified as current
    Total current liabilities
    Long-term debt

    $ 28,212

    Commitments and Contingencies (Notes B and H)


    Stockholders Equity:
    Common stock, $.0001 par value, 50,000,000
    shares authorized, 25,833,541 and
    25,741,991 shares issued and outstanding,
    respectively
    Additional paid-in capital
    Accumulated deficit
    Foreign currency translation adjustment

    3
    180,716
    (54,099)
    (1,395)

    3
    178,896
    (50,657)
    (907)

    125,225

    127,335

    $153,173

    $186,752

    See notes to consolidated financial statements.

    |<

    <

    >

    >|

    |<

    <

    >

    >|

    JAN BELL MARKETING, INC.


    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Amounts shown in thousands except share and per share data)

    Net sales
    Less:
    Effect of Sams
    agreement (Note B)

    Fifty-three
    Weeks Ended
    February 3,
    1996

    Fifty-two
    Weeks Ended
    January 28,
    1995

    Year Ended
    December 31,
    1993

    $ 254,004

    $ 305,685

    $ 275,177

    254,004

    Cost of sales
    Less:
    Effect of Sams
    agreement (Note B)

    199,579

    199,579

    Gross profit

    y
    p
    n
    o
    o
    i
    t
    C c

    99,718

    305,685

    175,459

    255,725

    243,350

    79,687

    255,725

    163,663

    u
    d
    e
    l
    o
    r
    p ep
    m
    R
    r
    a
    S t Fo
    o
    N
    54,425

    49,960

    11,796

    36,598

    44,131

    16,400

    17,694
    1,129
    597

    21,744
    47,773
    2,427
    5,474

    27,871
    10,217
    2,181

    Operating loss
    Interest expense
    Interest and other income

    (1,593)
    (3,196)
    1,477

    (71,589)
    (3,534)
    419

    (44,873)
    (3,195)
    635

    Loss before income taxes


    Income tax provision
    (benefit)

    (3,312)

    (74,704)

    (47,433)

    Store and warehouse


    operating and selling expenses
    General and
    administrative expenses
    Other charges (Note J)
    Amortization expense
    Currency exchange loss

    Net loss
    Net loss per
    common share

    130

    Weighted average number


    of common shares

    353

    $ (3,442)

    $ (75,057)

    $ (35,724)

    $ (.13)

    $ (2.92)

    $ (1.40)

    25,774,018

    25,688,592

    See notes to consolidated financial statements.

    |<

    <

    (11,709)

    >

    >|

    25,484,544

    |<

    <

    >|

    >

    JAN BELL MARKETING, INC.


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amounts shown in thousands)

    Cash flows from operating


    activities:
    Cash received from customers
    Cash paid to suppliers and
    employees
    Interest and other income
    received
    Interest paid
    Income taxes received

    Fifty-three
    Weeks Ended
    February 3,
    1996

    Fifty-two
    Weeks Ended
    January 28,
    1995

    Year Ended
    December 31,
    1993

    $ 260,304

    $ 313,163

    $ 319,907

    (253,058)
    1,477
    (3,196)
    506

    Net cash provided by (used in)


    operating activities

    6,033

    Cash flows used in investing


    activities:
    Capital expenditures

    y
    p
    n
    o
    o
    i
    t
    C c
    (292,249)

    (324,893)

    419
    (3,534)
    14,348

    635
    (3,195)
    499

    32,147

    (7,047)

    u
    d
    e
    l
    o
    r
    p ep
    m
    R
    r
    a
    S t Fo
    o
    N
    (1,826)

    Cash flows from financing


    activities:
    Debt repayment
    Proceeds from exercise
    of options
    Proceeds from issuance of
    common stock
    Stock purchase plan
    Purchase and retirement of
    common stock

    (6,316)

    (17,500)

    (12,611)

    323

    71

    78

    25
    112

    (35)

    (258)

    Net cash (used in) provided by


    financing activities

    (17,464)

    78

    202

    Net (decrease) increase in cash


    and cash equivalents

    (13,257)

    25,909

    (19,456)

    Cash and cash equivalents at


    beginning of year

    28,212

    2,303

    49,634

    Cash and cash equivalents at


    end of year

    $ 14,955

    $ 28,212

    $ 30,178

    |<

    <

    >

    >|

    |<

    <

    >

    >|

    JAN BELL MARKETING, INC.


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amounts shown in thousands)
    (continued)
    Fifty-three
    Weeks Ended
    February 3,
    1996
    Reconciliation of net loss to
    net cash provided by (used
    in) operating activities:
    Net loss
    Adjustments to reconcile
    net loss to net cash
    provided by (used in)
    operating activities:
    Depreciation and amortization
    Goodwill write-off
    Foreign currency translation
    adjustment
    Stock compensation expense
    (Increase) decrease in assets:
    Accounts receivable (net)
    Inventories
    Other assets

    $ (3,442)

    8,704
    (488)
    350

    Fifty-two
    Weeks Ended
    January 28,
    1995

    Year Ended
    December 31,
    1993

    y
    p
    n
    o
    o
    i
    t
    C c
    $(75,057)

    9,147
    23,795

    (907)
    404

    $(35,724)

    7,210

    5,929

    u
    d
    e
    l
    o
    r
    p ep
    m
    R
    r
    a
    S t Fo
    o
    N
    6,301
    10,567
    (1,990)

    Increase (decrease) in liabilities:


    Accounts payable
    Accrued expenses
    Liability for inventory
    repurchased
    Deferred income taxes

    (8,206)
    (5,763)
    -

    Net cash provided by (used in)


    operating activities

    $ 6,033

    <

    >

    44,730
    (70,799)
    2,168

    (10,430)
    1,107

    3,488
    4,607

    (18,166)

    33,426
    (2,082)

    $ 32,147

    See notes to consolidated financial statements.

    |<

    7,478
    79,306
    15,470

    >|

    $ (7,047)

    |<

    <

    >

    >|

    y
    p
    n
    o
    o
    i
    t
    C c

    u
    d
    e
    l
    o
    r
    p ep
    m
    R
    r
    a
    S t Fo
    o
    N

    |<

    <

    >

    >|

    You might also like