cash-flow-statement997.pptx

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CHAPTER 13Chapter 13Mugan-Akman 20072-36Cash Flow Statementbased on cash accounting amount of net income in a period is usually different than the amount of increase in cash in the same periodreports the effects of the activities investing, financing, operations of an entity on its cash flow and ties the three activities of a business togethercash includes cash and cash equivalentsCash equivalents: treasury bills maturing in 90 days or less; investment funds; foreign currency on hand; checking account and free savings accountChapter 13Mugan-Akman 20073-36Cash Flow Statementexplains the reasons for a change in cash.classifies the reasons for the change as an operating, investing or financing activity.reconciles net income with cash flow from operations.firms could prepare the cash flow statement directly from the cash account.most, however, find it more efficient to prepare the cash flow statement from the balance sheet and income statement

Chapter 13Mugan-Akman 20074-36Activities1. Operations -- cash flows related to selling goods and services; that is, the principle business of the firm.2. Investing -- cash flows related to the acquisition or sale of non-current assets.3. Financing -- long term and short term cash flows related to liabilities and owners equity; dividends are a financing cash outflow.

Chapter 13Mugan-Akman 20075-36External Uses of CFSTo assess the ability of a firm to manage cash flowsTo assess the ability of a firm to generate cash through its operationsTo assess the companys ability to meet its obligations and its dividend policyTo provide information about the effectiveness of the firm to convert its revenues to cashTo provide information to estimate or anticipate the companys need for additional financingChapter 13Mugan-Akman 20076-36Internal Uses of CFSAlong side with cash budget CFS is used:To assess liquidityDetermine if short-term financing is necessary

To determine dividend policyDecide to distribute; or increase or decrease

To evaluate the investment and financing decisions

Chapter 13Mugan-Akman 20077-36Cash flow from operating activitiesExamples (IAS No.7):cash received from customers through sale of goods or services performed;cash received from non-operating activities such as dividends from investments, interest revenue, commissions, and fees;cash payments to suppliers or employees;cash payments for taxes and other expenses;In effect, the income statement is changed from accrual basis to cash basisChapter 13Mugan-Akman 20078-36Investing ActivitiesExamples of investing activities include (IAS No.7):cash payments to acquire property, plant, and equipment (PPE), other tangible or intangible assets, and other long-term assets;cash received from sales of assets that are not held for the regular trading purposes such as sale of building; marketable securities such as trading and available for sale securities, and investments;loans extended to other companies; and collection of such loans;cash received from sale of, and paid for purchases of derivative instruments;Chapter 13Mugan-Akman 20079-36Financing ActivitiesExamples of financing activities are (IAS No.7):cash received from issuing share capital;cash payments to shareholders to redeem existing shares- treasury stock;cash proceeds from issuing bonds, loans, notes, mortgages and other short or long-term borrowings;cash repayment of loans and other borrowings; andcash payments to shareholders as dividends.Chapter 13Mugan-Akman 200710-36Components of the Cash Flow StatementCash received fromsale of goodsand services

Cash paid foroperating goodsand services

cash flowfrom operations

Operations-=Cash received fromsales of investmentsand longterm assets

Cash paid to purchaselong-term investmentscash flowfrom investing

Investing-=Cash received fromissue of debt orcapital stock

Cash paid for dividends and to repay debt or to buy treasury stockcash flowfrom financing

Financing-=Net change in cashfor the period=+ or -+ or -

cash inflows cash outflows

Chapter 13Mugan-Akman 200711-36Classification of Cash in-flows and outflowsFrom sales of goods and services to customersFrom receipt of interest or dividendsFrom sale of trading securitiesOperating ActivitiesTo pay wagesTo purchase inventoryTo pay expensesTo pay interestTo pay taxesTo purchase trading sec.From sale of PPE and other longterm assetsFrom sale of short or longterm securitiesFrom collection of loansInvesting ActivitiesTo purchase PPE and other longterm assetsTo purchase longterm securitiesTo make loansFrom sale of common or preferred stockFrom issuance of short or long term debtFinancing ActivitiesTo acquire preferred or common stockTo repay debtTo pay dividendsChapter 13Mugan-Akman 200712-36Format of the Cash Flow StatementName of the CompanyCash Flow StatementFor the period

Cash from operating activities ACash from investing activitiesBCash from financing activities CNet Change in Cash D = (A+B+C) increase or (decrease)+ Beginning Cash balanceCB, from the beginning balance sheet Ending Cash balance =CB + D should equal to ending cash balance in the ending balance sheetNon-cash Investing and Financing ActivitiesChapter 13Mugan-Akman 200713-36Determination of Cash Flows From Operating ActivitiesDirect MethodIncome Statement items are converted to cash flows individually

Indirect Method Net income or loss is adjusted for accruals such as accounts receivable and payable, and for non-cash expenses such as depreciation reconciliation of the accrual based and cash based accounting Chapter 13Mugan-Akman 200714-36Comparison of MethodsDirect method of presentation calculates cash flow from operations by subtracting cash disbursements to supplies, employees, and others from cash receipts from customers.The indirect method calculates cash flow from operations by adjusting net income for non-cash revenues and expenses.Most firms present their cash flows using the indirect method.Only operating activities section is different between the methods, investing and financing sections are the same.Chapter 13Mugan-Akman 200715-36Relationship of Accrual and Cash Basis of AccountingADJUSTMENTSTO RECONCILENET INCOME TO NET CASH FLOWSNET CASHFLOWS FROMOPERATINGACTIVITIESCASH BASIS OF ACCOUNTINGEARNED REVENUESINCURRED EXPENSESNETINCOMEACCRUAL BASIS OFACCOUNTINGChapter 13Mugan-Akman 200716-36Illustration of the Preparation of the Cash Flow Statement

EICC A.Income StatementFor the year 2007Chapter 13Mugan-Akman 200717-36EICC A.S. Comparative Balance Sheets- In TL

Chapter 13Mugan-Akman 200718-36Illustration-Cash flow statement-EICCAdditional Information:Company sold equipment with original cost of TL 1.500 and book value of TL 1.370 for TL 1.320.Sold trading securities of TL 1.200 with a gain of TL 300, and purchased some.Leased equipment in 2007 for TL 1.000 as a capital lease. Purchased building and equipment.Declared and paid dividends.Common stock of TL 600 par value was issued for TL 700 cash.Accounts payable pertain to merchandise suppliers, and accounts receivable to customers.

Chapter 13Mugan-Akman 200719-36Steps in Direct Method-CFS operating activitiescompute collectionsfrom customersfrom other revenuescompute payments for operating expensescompute payments for non-operating expenses

Chapter 13Mugan-Akman 200720-36

Sales TL 8.750 Deduct: increase in accounts receivable (1.300)Add: increase in advances from customers 200Cash collections from customers TL 7.650 Cash Collections from Customers Chapter 13Mugan-Akman 200721-36Cash Payments to Suppliers

Cost of Goods Sold TL 4.200 Add: increase in inventories 900Purchases of the periodTL 5.100

Purchases of the period TL 5.100 Deduct: increase in accounts payable 500Cash payments to suppliers TL 4.600

Chapter 13Mugan-Akman 200722-36Cash Payments for Operating Expenses

Salaries and Wages Expense TL 2.000 Deduct: Increase in Salaries and Wages Payable 300Salaries and Wages Paid TL 1.700 Insurance ExpenseTL 900Deduct: Decrease in Prepaid Insurance 300Cash paid for Insurance TL 600

Chapter 13Mugan-Akman 200723-36Cash Flows From Operating ActivitiesCash flows from operating activities:Cash Receipts:Collections from customers TL 7.650 Dividend and interest revenue 150 7.800Cash payments:To suppliers TL 4.600For operating expenses Salaries and wages paid TL 1.700 Insurance payments 600 2.300For non-operating expenses 800 Interest expense 350For income tax 450 (7.700)Net Cash Provided by Operating Activities TL 100 Chapter 13Mugan-Akman 200724-36Cash Flows from Investing Activities

Chapter 13Mugan-Akman 200725-36Cash Flow from Investing ActivitiesCash flow from investing activities:Purchase of building TL (300) Sale of equipment 1.320Purchase of equipment (1.520)Sale of trading securities 1.500Purchase of trading securities (300)

Net Cash flow from investing activities TL 700 Chapter 13Mugan-Akman 200726-36Cash Flow from Financing Activities

Chapter 13Mugan-Akman 200727-36Financing Activities

Chapter 13Mugan-Akman 200728-36EICC A.,Cash Flow Statement, For the year 2007- Direct Method

Chapter 13Mugan-Akman 200729-36Indirect MethodIf assets increased, then cash was spent,so it is an outflow.

If assets decreased,then they provided cashso it is an inflow.

If liabilities or S.H.E.increased, then cashwas received,so it is an inflow.

If liabilities or S.H.E.decreased, then cashwas spent,so it is an outflow.Assets:Liabilitiesand ShareholdersequityincreasedecreaseInvestigation of Changes in Specific AccountsChapter 13Mugan-Akman 200730-36Non-cash ExpensesNon-cash expenses, such as depreciation expense, are added backThese are not truly sources of cash even though they are associated with cash inflows; rather, this is a reversal of the accrual process that required the expenses to be recognized without regard for the cash flow

Chapter 13Mugan-Akman 200731-36Indirect Method- operating activitiesNet income+ noncash expenses: depreciation, amortization, uncollectible account expense,etc+ loss on sale of asset+ increases in current liabilities+ decreases in current assets- gain on sale of asset- decrease in current liabilities- increase in current assetsChapter 13Mugan-Akman 200732-36Indirect Method-Operating

Depreciation Expense380Amortization Expense100Gain on sale of Trading Securities300Loss on sale of equipment(50)Chapter 13Mugan-Akman 200733-36Cash Flow from Operating Activities Indirect Method

EICC A.For the year 2007Chapter 13Mugan-Akman 200734-36Uses of Cash Flow Statement Informationpattern of cash flow statements would provide valuable information about the growth stage, and possible strategies of companies predicting financial distressratios Chapter 13Mugan-Akman 200735-36Cash Flow Statement Patterns

Chapter 13Mugan-Akman 200736-36

Sheet1Net SalesTL 8.750Cost of Goods Sold(4,200)Gross Margin4,550Operating ExpensesDepreciation ExpenseTL 380Salaries and Wages Exp.2,000Insurance Expense900Amortization Expense100(3,380)Operating Income1,170Non-operating Revenues & ExpensesInterest Expense(350)Interest Revenue100Dividend Revenue50Gain on sale of Trading Securities300Loss on sale of equipment(50)50Income before tax1,220Income tax(450)Net IncomeTL 770

Sheet2

Sheet3

Sheet1Net SalesTL 8.750Cost of Goods Sold(4200.00)Gross Margin4550.00Operating ExpensesDepreciation ExpenseTL 380Salaries and Wages Exp.2000.00Insurance Expense900.00Amortization Expense100.00(3380.00)Operating Income1170.00Non-operating Revenues & ExpensesInterest Expense(350.00)Interest Revenue100.00Dividend Revenue50.00Gain on sale of Trading Securities300.00Loss on sale of equipment(50.00)50.00Income before tax1220.00Income tax(450.00)Net IncomeTL 770AssetsLiabilities and Shareholders' Equity31-Dec31-DecCurrent Assets20042005Current Liabilities20042005Cash1,3001,000Bank Notes Payable2,0002,600Trading Securities1,800900Accounts Payable1,9002,400Accounts Receivable3,5004,800Salaries & Wages Payable400700Inventories1,5002,400Dividends Payable800400Prepaid Insurance800500Advances from Customers200400Total Current Assets8,9009,600Total Current Liabilities5,3006,500Long-term AssetsLong-term LiabilitiesProperty, Plant and EquipmentBonds Payable2,8001,500Land2,2002,200Lease Obligation2,5003,200Buildings8,6008,900Total Long-term Liabilities5,3004,700Equipment12,94013,960Shareholders' EquityLess Accumulated Depreciation(6,240)(6,490)Share Capital3,0003,600Total Property, Plant and Equip.17,50018,570Additional Paid in Capital2,0002,100Legal Reserves100150Intangible AssetsRetained Earnings12,60012,920Patent1,9001,800Total Shareholders' Equity17,70018,770Total Assets28,30029,970Total Liabilities and Shareholders' Equity28,30029,970

Sheet2

Sheet3

Sheet1Net SalesTL 8.750Cost of Goods Sold(4200.00)Gross Margin4550.00Operating ExpensesDepreciation ExpenseTL 380Salaries and Wages Exp.2000.00Insurance Expense900.00Amortization Expense100.00(3380.00)Operating Income1170.00Non-operating Revenues & ExpensesInterest Expense(350.00)Interest Revenue100.00Dividend Revenue50.00Gain on sale of Trading Securities300.00Loss on sale of equipment(50.00)50.00Income before tax1220.00Income tax(450.00)Net IncomeTL 770AssetsLiabilities and Shareholders' Equity31-Dec31-DecCurrent Assets20042005Current Liabilities20042005Cash1,3001,000Bank Notes Payable2,0002,600Trading Securities1,800900Accounts Payable1,9002,400Accounts Receivable3,5004,800Salaries & Wages Payable400700Inventories1,5002,400Dividends Payable800400Prepaid Insurance800500Advances from Customers200400Total Current Assets8,9009,600Total Current Liabilities5,3006,500Long-term AssetsLong-term LiabilitiesProperty, Plant and EquipmentBonds Payable2,8001,500Land2,2002,200Lease Obligation2,5003,200Buildings8,6008,900Total Long-term Liabilities5,3004,700Equipment12,94013,960Shareholders' EquityLess Accumulated Depreciation-6,240-6,490Share Capital3,0003,600Total Property, Plant and Equip.17,50018,570Additional Paid in Capital2,0002,100Legal Reserves100150Intangible AssetsRetained Earnings12,60012,920Patent1,9001,800Total Shareholders' Equity17,70018,770Total Assets28,30029,970Total Liabilities and Shareholders' Equity28,30029,970

Sheet2Accounts Receivable31.12.2006 3.500Sales 8.750Collections from customers 7.45031.12.2005 4.800

Sheet3

Sayfa1+Decrease in Accounts Receivable+Increase in customer advancesCash Collection from Customers=Sales Revenue-Increase in Accounts Receivable-Decrease in customer advances

Sayfa2

Sayfa3

Sheet1Net SalesTL 8.750Cost of Goods Sold(4200.00)Gross Margin4550.00Operating ExpensesDepreciation ExpenseTL 380Salaries and Wages Exp.2000.00Insurance Expense900.00Amortization Expense100.00(3380.00)Operating Income1170.00Non-operating Revenues & ExpensesInterest Expense(350.00)Interest Revenue100.00Dividend Revenue50.00Gain on sale of Trading Securities300.00Loss on sale of equipment(50.00)50.00Income before tax1220.00Income tax(450.00)Net IncomeTL 770AssetsLiabilities and Shareholders' Equity31-Dec31-DecCurrent Assets20042005Current Liabilities20042005Cash1,3001,000Bank Notes Payable2,0002,600Trading Securities1,800900Accounts Payable1,9002,400Accounts Receivable3,5004,800Salaries & Wages Payable400700Inventories1,5002,400Dividends Payable800400Prepaid Insurance800500Advances from Customers200400Total Current Assets8,9009,600Total Current Liabilities5,3006,500Long-term AssetsLong-term LiabilitiesProperty, Plant and EquipmentBonds Payable2,8001,500Land2,2002,200Lease Obligation2,5003,200Buildings8,6008,900Total Long-term Liabilities5,3004,700Equipment12,94013,960Shareholders' EquityLess Accumulated Depreciation-6,240-6,490Share Capital3,0003,600Total Property, Plant and Equip.17,50018,570Additional Paid in Capital2,0002,100Legal Reserves100150Intangible AssetsRetained Earnings12,60012,920Patent1,9001,800Total Shareholders' Equity17,70018,770Total Assets28,30029,970Total Liabilities and Shareholders' Equity28,30029,970

Sheet2Accounts Receivable31.12.2004 3.500Sales 8.750Collections from customers 7.45031.12.2005 4.800Inventories31.12.2006 1.500Purchases 5.100Cost of Goods Sold 4.20031.12.2007 2.400

Sheet3

Sheet1DateAccount Title and DescriptionDebitCredit1-Jan-04Unpaid Capital100,000Share Capital100,000To record the issuance of Share Capital at the inception.DateAccount Title and DescriptionDebitCredit31-Jan-04Cash110,000Additional Paid-in Capital10,000Unpaid Capital100,000To record the sale of shares above par.DateAccount Title and DescriptionDebitCredit1-Apr-04Unpaid Capital100,000Share Capital100,000To record the issuance of Share Capital as share increaseDateAccount Title and DescriptionDebitCredit10-Apr-04Cash150,000Additional Paid-in Capital50,000Unpaid Capital100,000To record the sale of shares above par.DateAccount Title and DescriptionDebitCredit30-Jun-07Convertible Bonds Payable100,000Unamortized Premium on Bonds4,000Loss on Redemption-Con. Bonds16,000Share Capital100,000Additional Paid in Capital20,000To record conversion of bonds into common stockDateAccount Title and DescriptionDebitCredit30-Jun-07Convertible Bonds Payable100,000Unamortized Premium on Bonds4,000Share Capital100,000Additional Paid in Capital4,000To record conversion of bonds into common stockDateAccount Title and DescriptionDebitCredit27-Jun-04Cash350,000Buildings150,000Share Capital500,000To record the participation in share capitalDateAccount Title and DescriptionDebitCredit21-Oct-04Treasury Stock240,000Cash240,000To record the purchase of 10.000 treasury stocks at TL 24DateAccount Title and DescriptionDebitCredit30-Oct-04Cash150,000Treasury Stock120,000Additional Paid-in Capital-30,000Treasury StockTo record sales of 5.000 shares of treasury stock at TL30DateAccount Title and DescriptionDebitCredit4-NovCash75,0002004Additional paid in capital- Treasury Stock30,000Retained Earnings15,000Treasury Stock120,000To record sales of 5.000 shares of treasury stock at TL15DateAccount Title and DescriptionDebitCredit1-AprRetained Earnings12,0002005Share Capital10,000Additional-paid-in Capital2,000To record stock dividend of 10%DateAccount Title and DescriptionDebitCredit1-AprRetained Earnings50,0002005Share Capital50,000To record stock dividend of 50%

Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2006 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2007 2.400

Sheet3Paid-in CapitalAddl Paid in CapitalLegal ReservesOther ReservesRetained EarningsTotal SH EquityBalance 31 December 2003200,000350,0883,34030,94960,000644,377Inc in Paid in Capital200,000200,000Inc.in Addl Paid in Capital175,000175,000Available For Sale Securities:Valuation Gains taken to Equity5,0965,096Transferred to Profit/loss on sale-1,100-1,100Cash Flow Hedges:Gains taken to Equity6,1006,100Appropriation of income to Legal Reserves9,393-9,393Period Income54,60054.600Dividends-2,807-2,807Balance 31 December 2004400,000525,08812,73341,045102,4001,081,266

Sayfa1- Decrease in Inventories+Decrease in Accounts PayableCash Payments to Suppliers=COGS+ Increase in Inventories-Increase in Accounts Payable

Sayfa2

Sayfa3


Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2006 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2007 700


Sayfa1+Increase in prepaid expenses+Decrease in Accrued ExpensesCash Payments for Operating Expenses=Operating Expenses-Decrease in prepaid expenses-Increase in Accrued Expenses

Sayfa2

Sayfa3


Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2006 800Insurance Payments 600Insurance Expense 90031.12.2007 500



Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2004 800Insurance Payments 600Insurance Expense 90031.12.2005 50020062007ChangeTrading Securities1,800900(900)Property, Plant and EquipmentLand2,2002,2000Buildings8,6008,900300Equipment12,94013,9601,020Less Accumulated Depreciation(6,240)(6,490)(250)Intangible AssetsPatent1,9001,800(100)




Sheet3Paid-in CapitalAddl Paid in CapitalLegal ReservesOther ReservesRetained EarningsTotal SH EquityBalance 31 December 2003200,000350,0883,34030,94960,000644,377Inc in Paid in Capital200,000200,000Inc.in Addl Paid in Capital175,000175,000Available For Sale Securities:Valuation Gains taken to Equity5,0965,096Transferred to Profit/loss on sale-1,100-1,100Cash Flow Hedges:Gains taken to Equity6,1006,100Appropriation of income to Legal Reserves9,393-9,393Period Income54,60054.600Dividends-2,807-2,807Balance 31 December 2004400,000525,08812,73341,045102,4001,081,266Equipment31.12.2006 12.940Leased Equipment 1.000Equipment sold-at cost 1.500Purchased 1.52031.12.2007 13.960



Sheet3Paid-in CapitalAddl Paid in CapitalLegal ReservesOther ReservesRetained EarningsTotal SH EquityBalance 31 December 2003200,000350,0883,34030,94960,000644,377Inc in Paid in Capital200,000200,000Inc.in Addl Paid in Capital175,000175,000Available For Sale Securities:Valuation Gains taken to Equity5,0965,096Transferred to Profit/loss on sale-1,100-1,100Cash Flow Hedges:Gains taken to Equity6,1006,100Appropriation of income to Legal Reserves9,393-9,393Period Income54,60054.600Dividends-2,807-2,807Balance 31 December 2004400,000525,08812,73341,045102,4001,081,266Equipment31.12.2004 12.940Leased Equipment 1.000Equipment sold-at cost 1.500Purchased 1.52031.12.2005 13.960Trading Securities31.12.2006 1.800Purchased 300Securities sold-at cost 1.20031.12.2007 900


Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2004 800Insurance Payments 600Insurance Expense 90031.12.2005 50020042005ChangeTrading Securities1,800900(900)Property, Plant and EquipmentLand2,2002,2000Buildings8,6008,900300Equipment12,94013,9601,020Less Accumulated Depreciation(6,240)(6,490)(250)Intangible AssetsPatent1,9001,800(100)31-Dec20062007changeCurrent LiabilitiesBank Notes PayableTL 2.000TL 2.600TL 600Dividends Payable800400(400)Long-term LiabilitiesBonds Payable2,8001,500(1300)Lease Obligation2,5003,200700Shareholders' EquityShare Capital3,0003,600600Additional Paid in Capital2,0002,100100Legal Reserves10015050Retained Earnings12,60012,920320

Sheet3Paid-in CapitalAddl Paid in CapitalLegal ReservesOther ReservesRetained EarningsTotal SH EquityBalance 31 December 2003200,000350,0883,34030,94960,000644,377Inc in Paid in Capital200,000200,000Inc.in Addl Paid in Capital175,000175,000Available For Sale Securities:Valuation Gains taken to Equity5,0965,096Transferred to Profit/loss on sale-1,100-1,100Cash Flow Hedges:Gains taken to Equity6,1006,100Appropriation of income to Legal Reserves9,393-9,393Period Income54,60054.600Dividends-2,807-2,807Balance 31 December 2004400,000525,08812,73341,045102,4001,081,266Equipment31.12.2004 12.940Leased Equipment 1.000Equipment sold-at cost 1.500Purchased 1.52031.12.2005 13.960Trading Securities31.12.2004 1.800Purchased 300Securities sold-at cost 1.20031.12.2005 900


Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2004 800Insurance Payments 600Insurance Expense 90031.12.2005 50020042005ChangeTrading Securities1,800900(900)Property, Plant and EquipmentLand2,2002,2000Buildings8,6008,900300Equipment12,94013,9601,020Less Accumulated Depreciation(6,240)(6,490)(250)Intangible AssetsPatent1,9001,800(100)31-Dec20042005changeCurrent LiabilitiesBank Notes PayableTL 2.000TL 2.600TL 600Dividends Payable800400-400Long-term LiabilitiesBonds Payable2,8001,500-1,300Lease Obligation2,5003,200700Shareholders' EquityShare Capital3,0003,600600Additional Paid in Capital2,0002,100100Legal Reserves10015050Retained Earnings12,60012,920320

Sheet3Paid-in CapitalAddl Paid in CapitalLegal ReservesOther ReservesRetained EarningsTotal SH EquityBalance 31 December 2003200,000350,0883,34030,94960,000644,377Inc in Paid in Capital200,000200,000Inc.in Addl Paid in Capital175,000175,000Available For Sale Securities:Valuation Gains taken to Equity5,0965,096Transferred to Profit/loss on sale-1,100-1,100Cash Flow Hedges:Gains taken to Equity6,1006,100Appropriation of income to Legal Reserves9,393-9,393Period Income54,60054.600Dividends-2,807-2,807Balance 31 December 2004400,000525,08812,73341,045102,4001,081,266Equipment31.12.2004 12.940Leased Equipment 1.000Equipment sold-at cost 1.500Purchased 1.52031.12.2005 13.960Trading Securities31.12.2004 1.800Purchased 300Securities sold-at cost 1.20031.12.2005 900Lease Obligations31.12.2006 2.500Lease Payments 300Leased Equipment 1.00031.12.2007 3.200Retained EarningsLegal Reserves 5031.12.2004 12.600Dividends Declared 400Net Income 77031.12.2005 12.920Dividends Payable31.12.2004 800Dividends Paid 800Dividends Declared 40031.12.2005 400








Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2004 800Insurance Payments 600Insurance Expense 90031.12.2005 50020042005ChangeTrading Securities1,800900(900)Property, Plant and EquipmentLand2,2002,2000Buildings8,6008,900300Equipment12,94013,9601,020Less Accumulated Depreciation(6,240)(6,490)(250)Intangible AssetsPatent1,9001,800(100)31-Dec20042005changeCurrent LiabilitiesBank Notes PayableTL 2.000TL 2.600TL 600Dividends Payable800400-400Long-term LiabilitiesBonds Payable2,8001,500-1,300Lease Obligation2,5003,200700Shareholders' EquityShare Capital3,0003,600600Additional Paid in Capital2,0002,100100Legal Reserves10015050Retained Earnings12,60012,920320Cash flow from operating activitiesCash Receipts:Collections from CustomersTL 7.650Dividend and Interest Revenue1507,800Cash Payments:To suppliersTL 4.600For operating expenses2,300For non-operating expenses350For income tax450(7,700)Net cash Provided by Operating Activities100Cash Flow from Investing ActivitiesPurchase of Buildings(300)Sale of Equipment1,320Purchase of Equipment(1,520)Sale of Trading Securities1,500Purchase of Trading Securities(300)Net Cash Flow from Investing Activities700Cash Flow from Financing ActivitiesBank Loans Received600Issuance of Common Stock600Additional Paid in Capital100Cash Dividends Paid(800)Bond Repayment(1,300)Lease Obligation Payments(300)Net Cash Flow from Financing Activities(1,100)Net increase (decrease) in Cash(300)Cash at the beginning of the period1,300Cash at the end of the period1,000Non-Cash Investing and Financing Activities:Leasing of equipmentTL 1.000



Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2004 800Insurance Payments 600Insurance Expense 90031.12.2005 50020042005ChangeTrading Securities1,800900(900)Property, Plant and EquipmentLand2,2002,2000Buildings8,6008,900300Equipment12,94013,9601,020Less Accumulated Depreciation(6,240)(6,490)(250)Intangible AssetsPatent1,9001,800(100)31-Dec20042005changeCurrent LiabilitiesBank Notes PayableTL 2.000TL 2.600TL 600Dividends Payable800400-400Long-term LiabilitiesBonds Payable2,8001,500-1,300Lease Obligation2,5003,200700Shareholders' EquityShare Capital3,0003,600600Additional Paid in Capital2,0002,100100Legal Reserves10015050Retained Earnings12,60012,920320Cash flow from operating activitiesCash Receipts:Collections from CustomersTL 7.650Dividend and Interest Revenue1507,800Cash Payments:To suppliersTL 4.600For operating expenses2,300For non-operating expenses350For income tax450(7,700)Net cash Provided by Operating Activities100Cash Flow from Investing ActivitiesPurchase of Buildings(300)Sale of Equipment1,320Purchase of Equipment(1,520)Sale of Trading Securities1,500Purchase of Trading Securities(300)Net Cash Flow from Investing Activities700Cash Flow from Financing ActivitiesBank Loans Received600Issuance of Common Stock600Additional Paid in Capital100Cash Dividends Paid(800)Bond Repayment(1,300)Lease Obligation Payments(300)Net Cash Flow from Financing Activities(1,100)Net increase (decrease) in Cash(300)Cash at the beginning of the period1,300Cash at the end of the period1,000Non-Cash Investing and Financing Activities:Leasing of equipmentTL 1.00031-Dec20062007ChangeAccounts Receivable (net)3,5004,8001,300Inventories1,5002,400900Prepaid Insurance800500(300)Accounts Payable1,9002,400500Salaries and Wages Payable400700300Advances from Customers200400200



Sheet2BeforeAfterShareholders' EquityTLTLPaid-in Capital200,000210,000Share Capital200,000210,000Unpaid Capital0.00.0Capital Reserves350,088355,088Additional Paid-in Capital350,088355,088Profit Reserves34,28934,289Legal Reserves3,3403,340Other Reserves30,94930,949Retained Earnings60,00045,000Shareholders' Equity644,377644,377effect of the stock split made by Better-OffBefore Stock SplitAfterStock SplitShare CapitalTL 250.000TL 250.000Additional Paid-in Capital175,000175,000Reserves3,0003,000Retained Earnings72,00072,000Shareholders' EquityTL 500.000TL 500.000Outstanding shares- number of shares25,00050,000Book Value per Share -TL per share2010Accounts Payable31.12.2004 1.900Payments to Suppliers 4.600Purchases 5.10031.12.2005 2.400Salaries and Wages Payable31.12.2004 400Payments to Employees 1.700Salaries & Wages Expense 2.00031.12.2005 700Prepaid Insurance31.12.2004 800Insurance Payments 600Insurance Expense 90031.12.2005 50020042005ChangeTrading Securities1,800900(900)Property, Plant and EquipmentLand2,2002,2000Buildings8,6008,900300Equipment12,94013,9601,020Less Accumulated Depreciation(6,240)(6,490)(250)Intangible AssetsPatent1,9001,800(100)31-Dec20042005changeCurrent LiabilitiesBank Notes PayableTL 2.000TL 2.600TL 600Dividends Payable800400-400Long-term LiabilitiesBonds Payable2,8001,500-1,300Lease Obligation2,5003,200700Shareholders' EquityShare Capital3,0003,600600Additional Paid in Capital2,0002,100100Legal Reserves10015050Retained Earnings12,60012,920320Cash flow from operating activitiesCash Receipts:Collections from CustomersTL 7.650Dividend and Interest Revenue1507,800Cash Payments:To suppliersTL 4.600For operating expenses2,300For non-operating expenses350For income tax450(7,700)Net cash Provided by Operating Activities100Cash Flow from Investing ActivitiesPurchase of Buildings(300)Sale of Equipment1,320Purchase of Equipment(1,520)Sale of Trading Securities1,500Purchase of Trading Securities(300)Net Cash Flow from Investing Activities700Cash Flow from Financing ActivitiesBank Loans Received600Issuance of Common Stock600Additional Paid in Capital100Cash Dividends Paid(800)Bond Repayment(1,300)Lease Obligation Payments(300)Net Cash Flow from Financing Activities(1,100)Net increase (decrease) in Cash(300)Cash at the beginning of the period1,300Cash at the end of the period1,000Non-Cash Investing and Financing Activities:Leasing of equipmentTL 1.00031-Dec20042005ChangeAccounts Receivable (net)3,5004,8001,300Inventories1,5002,400900Prepaid Insurance800500-300Accounts Payable1,9002,400500Salaries and Wages Payable400700300Advances from Customers200400200Net IncomeTL 770Depreciation and Amortization480Add: increase in Accounts Payable500Add: increase in salaries and wages payable300Add: Advances from customers200Add: Decrease in Prepaid Insurance300Add: Loss on Sale of Equipment502,600Deduct: increase in Accounts Receivable(1,300)Deduct: increase in Inventories(900)Deduct: Gain on Sale of Marketable Securities(300)(2,500)Net Cash from Operating ActivitiesTL 100


Sayfa1Cash flows from operating activitiesCash ReceiptsCollections from Customers7,650Dividend and Interest Revenue1507,800Cash PaymentsTo suppliers4,600For operating expensesSalaries and Wages1,700Insurance Payments6002,300For non-operating expensesInterest Expense350350For Income Tax4507,700Net Cash Provided by Operating Activities100Cash flow from investing activitiesPurchase of buildings(200)Sale of Equipment900Purchase of equipment(1,200)Sale of Marketable Securities1,500Purchase of Marketable Securities(300)Net Cash flow from investing activities700Cash flow from financing activitiesBank Loans Received600Issuance of Capital Stock600Additional Paid in Capital100Cash Dividend Paid(800)Bond Repayment(1,300)Lease Obligation Payment(300)Net Cash flow from financing activities(1,100)Net increase (decrease) in cash(300)Cash at the beginning of the period1,300Cash at the end of the period1,000Non-Cash Investing and Financing ActivitiesLeasing of equipment1,000

Sayfa219992000ChangeCurrent LiabilitiesBank Notes Payable2,0002,600600Dividends Payable800400(400)Long-term LiabilitiesBonds Payable2,8001,500(1,300)Shareholders' EquityShare Capital3,0003,600600Additional Paid in Capital2,0002,100100Legal Reserves10015050Revaluation Fund10012020Retained Earnings12,50012,800300

Sayfa4Pattern12345678Cash Flows from Operating++++0---Cash Flows from Investing--0--0--Cash Flows from Financing+--0+++-Cement Industry Patterns2731111010Textile Industry Patterns1774126241

Sayfa3Net Income750Depreciation and Amortization500Add: increase in Accounts Payable500Add: increase in salaries and wages payable300Add: increase Advances from Customers200Add: decrease in Prepaid Insurance300Add: Loss on Sale of Equipment502,600Deduct: increase in Accounts Receivable(1,300)Deduct: increase in in inventories(900)Dedfuct: Gain on Sale of Marketable Securities(300)Net Cash Flows from Operating Activities100

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