Calculate Cash Flow Ratios
Given the following information extracted from Byte City’s financial statements, calculate and evaluate its cash flow ratios:
|
2000 |
1999 |
|
|
Interest paid |
$ 4,186,532 |
$ 3,695,431 |
|
Interest received |
718,574 |
1,218,940 |
|
Income taxes paid |
150,000 |
1,997,600 |
|
Total assets |
107,219,075 |
103,542,717 |
|
Long term debt |
58,742,916 |
62,671,335 |
|
Shareholders’ equity |
42,827,531 |
35,912,651 |
|
Net income (loss) |
7,459,828 |
(32,818,050) |
|
Net revenues |
129,485,952 |
109,948,716 |
|
Net cash provided by operations |
2,956,020 |
587,249 |
|
Cash received from customers |
118,158,941 |
101,879,383 |
Required
a. Discuss the differences between net cash provided by operations and cash received from customers.
b. Discuss the differences between net revenues and cash received from customers.
c. Using the previous data, estimate Byte City’s overall cash flows or cash balances at the end of each year. Justify your conclusions.
d. Refer to the data in the previous problem (5 37). Revise your conclusions about Byte City’s overall cash flows or cash balances at the end of each year. Again, justify your revised answer.
e. Calculate the following ratios for each year:
1. Cash return on assets (2000 only)
2. Quality of sales
3. Quality of income
4. Cash interest coverage
f. Based on these ratios, evaluate Byte City’s performance each year. In what areas do the cash flow ratios indicate positive or negative performances?
g. What additional information would be useful in evaluating Byte City’s performance?