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STATEMENT OF CASH FLOWS:  REPORTING THE EFFECTS OF OPERATING, INVESTING, AND FINANCING ACTIVITIES ON CASH FLOWS   T4-X

4.15 continued.

b.YAHOO, INC.

Statement of Cash Flows

For Year 8 and Year 9

Year 8Year 9

Operations:

Net Income (Loss)$(4,659)$(23,267)

Depreciation5522,554

(Increase) Decrease in Accounts Receiv-

able(4,267)(5,904)

(Increase) Decrease in Prepayments(384)(5,509)

Increase (Decrease) in Accounts Payable1,0863,605

Increase (Decrease) in Other Current Lia-

bilities6,44711,598

Cash Flow from Operations$(1,225)$(16,923)

Investing:

Acquisition of Property, Plant and Equip-

ment$(3,155)$(14,930)

Sale of Marketable Securities--32,917

Acquisition of Marketable Securities(60,689)--

Acquisition of Investment in Securities(10,477)(9,053)

Cash Flow from Investing$(74,321)$8,934

Financing:

Issue of Common Stock$103,796$36,980

Increase (Decrease) in Cash$28,250$28,991

Cash, Beginning of Year5,29733,547

Cash, End of Year$33,547$62,538

c.Yahoo, Inc. operated at a loss and generated negative cash flow from operations each year.  Such operating results are not unusual for a startup company.  Although its expenditures on property, plant and equipment increased significantly between the two years, Yahoo, Inc. is not heavily capital intensive.  The firm used common stock to finance its growth during the startup phase.  The main resources of an internet service provider are its software and customer list, neither of which serves as safe collateral for borrowing.  Yahoo, Inc.,

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