Sources and Uses of Cash
Consider the following balance sheets for the Philippe Corporation. Calculate the changes in the various accounts and, where applicable, identify the change as a source or use of cash. What were the major sources and uses of cash? Did the company become more or less liquid during the year? What happened to cash during the year?
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PHILIPPE CORPORATION Balance Sheets as of December 31, 2001 and 2002 ($ in millions) |
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Assets |
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Current assets |
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Cash |
$ 210 |
$ 215 |
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Accounts receivable |
355 |
310 |
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Inventory |
507 |
328 |
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Total |
$1,072 |
$ 853 |
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Fixed assets |
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Net plant and equipment |
$6,085 |
$6,527 |
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Total assets |
$7,157 |
$7,380 |
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Liabilities and Owners’ Equity |
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Current liabilities |
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Accounts payable |
$ 207 |
$ 298 |
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Notes payable |
1,715 |
1,427 |
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Total |
$1,922 |
$1,725 |
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Long term debt |
$1,987 |
$2,308 |
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Owners’ equity |
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Common stock and paid in surplus |
$1,000 |
$1,000 |
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Retained earnings |
2,248 |
2,347 |
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Total |
$3,248 |
$3,347 |
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Total liabilities and owners’ equity |
$7,157 |
$7,380 |
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