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Kaplan Mt482 week 7 assignment

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Question;Complete the Case Study: Analysis of Cash FlowsFor this Assignment, turn to page 439 in your textbook (Chapter 7 ofFinancial Statements Analysis), and complete Case 7-1, Cash Flow and Free Cash Flow Analysis ? Lands? End.This is a challenging activity. You should prepare to spend substantial time working on your response.Directions for Submitting Your ProjectBefore you submit your project, you should save your work on your computer in a location, and with a name, that you will remember. Make sure your project is in the appropriate format (Word, Excel, PowerPoint, or other), then, when you are ready, you may submit on the Dropbox page.The statement of cash flows for Lands? End is reproduced here: CASE 7?1LANDS? END, INC. & SUBSIDIARIESConsolidated Statements of Cash FlowsFOR PERIOD ENDED($ in thousands) Year 9 Year 8 Year 7Cash flows from operating activitiesNet income..........................................................$ 31,185 $ 64,150 $ 50,952Adjustments to reconcile net income tonet cash flows from operating activities?Pretax non-recurring charge.................................12,600 ? ?Depreciation and amortization...................................... 18,731 15,127 13,558Deferred compensation expense.................................... 653 323 317Deferred income taxes................................................... (5,948) (1,158) 994Pretax gain on sale of subsidiary................................... ? (7,805) ?Loss on disposal of fixed assets.................................... 586 1,127 325Changes in assets and liabilities excludingeffects of divestituresReceivables.......................................................... (5,640) (7,019) (675)Inventory.............................................................. 21,468 (104,545) 22,371Prepaid advertising.............................................. (2,844) (7,447) 4,758Other prepaid expenses........................................ (2,504) (1,366) (145)Accounts payable................................................. 4,179 11,616 14,205Reserve for returns............................................... 1,065 944 629Accrued liabilities................................................ 6,993 8,755 4,390Accrued profit sharing.......................................... (2,030) 1,349 1,454Income taxes payable........................................... (5,899) (1,047) 8,268Other............................................................................. 1,665 64 394Net cash flows from (used for) operating activities................ 74,260 (26,932) 121,795Cash flows from (used for) investing activitiesCash paid for capital additions......................................... (46,750) (47,659) (18,481)Proceeds from sale of subsidiary....................................... ? 12,350 ?Net cash flows used for investing activities........................... (46,750) (35,309) (18,481)Cash flows from (used for) financing activitiesProceeds from short-term debt........................................... 6,505 21,242 1,876Purchases of treasury stock............................................... (35,557) (45,899) (30,143)Issuance of treasury stock................................................. 1,845 409 604Net cash flows used for financing activities.......................... (27,207) (24,248) (27,663)Net increase (decrease) in cash and cash equiv.................... $ 303 $ (86,489) $ 75,651Beginning cash and cash equivalents................................... 6,338 92,827 17,176Ending cash and cash equivalents........................................ $ 6,641 $ 6,338 $ 92,827Required:a. Lands? End recently implemented a strategy of filling nearly all orders when the order is placed. In what year doyou believe the company implemented this strategy and how is the strategy reflected in the information containedin the statement of cash flows?b. Explain how the following items reconcile net income to net cash flows from operating activities:(1) Depreciation (2) Receivables (3) Inventory (4) Reserve for returnsc. Calculate free cash flows for each year shown.d. How does Lands? End use its free cash flow? Do you think its use of free cash flows reflects good financialstrategy?

 

Paper#49286 | Written in 18-Jul-2015

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