Question

what is the purpose of statement cash flow

M13-1 Calculations for Horizontal Analyses [LO 13-2] Using the following income statements, perform the calculations needed for horizontal analyses. (Decreases should be indicated by a minus sign. Round percentage values to 1 decimal place.) LOCKEY FENCING CORPORATION Income Statements For the Years Ended December 31 Change in Current Previous Dollars Percentage 115,000 82,500 65,500 48,750 49.500 33,750 3,000 3,50030,750 5,250 9,750 25,500 7,650 S 27,825 S 17,850 Net Sales Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Income from Operations Interest Expense Income before Income Tax Income Tax Expense Net Income 6,000 3,750 11,925

Answer 1

Statement of cash flow helps a company to provide information about cash receipts, cash expenditure and net change in cash resulting from the operating, investing and financing activities of a company. It also provides information about cash excess or deficiency. It helps to identify various sources from where the company has obtained cash and spent cash.

LOCKEY FENCING CORPORATION Income Statements For the Years Ended December 31 Workings Change in Percentage -Change in Dollars / Previous 100 39.4%| ($ 115,000-$ 82,500) | ($ 32,500 / $ 82,500) * 100 34.4%)($65,500-$48,750) |($ 16,750 / $48,750)*100 46.7%!($49,500-$33,750) |($ 15,750 / $ 33,750)*100 Dollars Ξ Current- Dollars Percentage Current Previous Previous $ 115,000$ 82,500 $ 65,500 48,750 $ 49,500 $ 33,750 $ 32,500 16,750 15,750 3,000 43,500 $ 30,750 S 12,750 Net sales Cost of Goods sold Gross profit Selling, General and Administrative expenses Income from Operations Interest expense Income before Income Tax Income Tax Expense Net Income $ $ 100.0% ($6,000 _ $3,000) 41.5% ($43,500-$30,750) 28.6%)($ 3,750-$5,250) 55.9%! ($ 39,750-$ 25,500) 55.9%)($ 11,925-$7,650) 55.9% ($ 27,825-S 17,850) |($3,000 / $ 3,000) * 100 6,000 3,000 |($ 12,750 / $ 30,750)*100 |($(1,500) / $ 5,250) * 100 | ($ 14,250 / $ 25,500) * 100 $ 3,750 $ 5,250(1,500) $ 39,750 $ 25,500 $ 14,250 $ 11,925 $7,650 4,275 $27,825 $ 17,850 $ 9,975 |($4,275 / $ 7,650) * 100 | (S 9.975 / S 17.850) * 100