Critical Thinking NOTE: I NEED ASSISTANCE FROM A TUTUR THAT WRITES CLEAR ENGLISH. MY LAST PAPER WAS A DISASTER, I HAD TO FIND ASSISTANCE LOCALLY TO HELP WITH IT AND ENDED UP BEING LATE SUBMITTING THE...

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Critical Thinking



NOTE: I NEED ASSISTANCE FROM A TUTUR THAT WRITES CLEAR ENGLISH. MY LAST PAPER WAS A DISASTER, I HAD TO FIND ASSISTANCE LOCALLY TO HELP WITH IT AND ENDED UP BEING LATE SUBMITTING THE PAPER. I NEED TO BE ABLE TO UNDERSTAND THE TOPIC CLEARLY.


Read and complete case study, "Eat at My Restaurant" in your text. Answer the questions following the case study.



a)
Comment on the difference between net cash provided by operating activities and net income. Speculate on which number is likely to be the better indicator of long-term profitability. For example net income and cash provided by operating income. One of these predicts long-term profitability according to GAAP. Identify and explain which one predicts the long term profitability of a company (Net income or cash provided by operating income).



b)
Comment on the data reviewed for each firm. Class, this means you are commenting or analyzing the fluctuation for each company based on the following:
- net cash provided by operating activities. For example, Yum Brands, Inc net cash provided by operating activities decreased by $30m which indicates approximately 2% reduction in net cash. Panera's net cash provided by operating activities increased a little over $2k representing approximately 1% total increase and so on. Continue your analysis on the following areas by identifying the fluctuations:
- net income
- operating cash flow/current maturities of long-term debt and current notes payable
- operating cash flow/total debt
- operating cash flow per share


- operating cash flow/cash dividends



c)
Do any of the firms appear to have a cash flow problem? Comment.

Answered Same DayDec 21, 2021

Answer To: Critical Thinking NOTE: I NEED ASSISTANCE FROM A TUTUR THAT WRITES CLEAR ENGLISH. MY LAST PAPER WAS...

David answered on Dec 21 2021
113 Votes
Solution (a):-
Net income and net cash provided by operating activities both are different things and there is no
tight correlation betwee
n net income and cash from operations. Cash flow from operations shows
the net cash flow (i.e. net cash inflow or outflow) generated/used by the company from/in its
operations. Net income shows the net result (i.e. net profit or loss) earned/incurred by the entity
and this is computed on the accrual basis of accounting. The difference between net cash flow
and cash from operations occurs due to accrual system of accounting. The difference between the
cash flow from operations and net profits earned is because the net profits are calculated on the
basis of accrual basis of accounting, whereas cash flow from operations is based on cash inflow
and outflow i.e. cash basis of accounting. For example, there might be a case where all the sales
done by the company are on credit basis and no cash has been realized till the end of the
accounting year, now this will increase the net profit reported by the company but cash flow
from operations would not increase.
In other words, it can be concluded that the relationship between cash flow from operations and
net profit is not very tightly correlated, but a nominal correlation do exist between them. Net
income is a better to evaluate the long term profitability for an organization, as the cash flow...
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