SAPP Academy

8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

FINANCIAL STATEMENT ANALYSIS

MODULE 4: ANALYZING STATEMENTS OF CASH FLOWS I
I. SUMMARY
Unit 1: Overview and types of cash flow
Unit 2: Direct method
Unit 3: Indirect method

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 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

II. QUESTIONS
Unit 1: Overview and types of cash flow
Question 1:
The sale of a building for cash would be classified as what type of activity on the cash flow
statement?
A. Operating.
B. Investing.
C. Financing.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

2
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Question 2:
A conversion of a face value $1 million convertible bond for $1 million of common stock would
most likely be:
A. reported as a $1 million investing cash inflow and outflow.
B. reported as a $1 million financing cash outflow and inflow.
C. reported as supplementary information to the cash flow statement.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

3
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Question 3:
Interest paid is classified as an operating cash flow under:
A. US GAAP but may be classified as either operating or investment cash flows under IFRS.
B. IFRS but may be classified as either operating or investing cash flows under US GAAP.
C. US GAAP but may be classified as either operating or financing cash flows under IFRS.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

4
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Question 4:
Juniper Corp. has the following transactions in 20X5.
• Juniper’s equipment with a book value of $55,000 was sold for $85,000 cash.
• A parcel of land was purchased for $100,000 worth of Juniper common stock.
• ABC Company paid Juniper preferred dividends of $40,000.
• Juniper declared and paid a $100,000 cash dividend.
Under U.S. GAAP, what is cash flow from financing (CFF) for Juniper for 20X5?
A. –$100,000.
B. –$115,000.
C. –$60,000.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

5
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Unit 2: Direct method

Question 5:
White Flag, a women’s clothing manufacturer, reported salaries expense of $20 million. The
beginning balance of salaries payable was $3 million, and the ending balance of salaries
payable was $1 million. How much cash did the company pay in salaries?
A. $18 million.
B. $21 million.
C. $22 million.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

6
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Question 6:
Silverago Incorporated, an international metals company, reported a loss on the sale of
equipment of $2 million in 2018. In addition, the company’s income statement shows
depreciation expense of $8 million and the cash flow statement shows capital expenditure of $10
million, all of which was for the purchase of new equipment.
Using the following information from the comparative balance sheets, how much cash did the
company receive from the equipment sale?

Balance sheet item 12/31/2027 12/31/2018 Change

Equipment $100 million $105 million $5 million

Accumulated depreciation – equipment $40 million $46 million $6 million

A. $1 million.
B. $2 million.
C. $3 million.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

7
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Unit 3: Indirect method

Question 7:
An analyst gathered the following information from a company’s 2018 financial statements (in $
millions):

Year ended 31 December 2017 2018

Net sales 245.8 254.6

Cost of goods sold 168.3 175.9
Accounts receivable 73.2 68.3
Inventory 39.0 47.8
Accounts payable 20.3 22.9

Based only on the information above, the company’s 2018 statement of cash flows in the direct
format would include amounts (in $ millions) for cash received from customers and cash paid
to suppliers, respectively, that are closest to:

Cash received from customers Cash paid to suppliers

A. 249.7 169.7

B. 259.5 174.5

C. 259.5 182.1

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

8
 SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

Question 8:
Given the following information, what is the adjustment to net income when calculating cash
flow from operations using the indirect method?
• Increase in accounts payable of $25.
• Sold one share of stock for $15.
• Paid dividends of $10 to shareholders.
• Depreciation expense of $100.
• Increase in inventory of $20.
A. -$95.
B. -$50.
C. +$105.

For Activity 2.1: Self-practice For Activity 2.2: Self-review

Note down short explanations Compare your choices with the final answer and correct (if needed).
for your answer choices. Note down your own key takeaways/lessons learned.

Please note down here

9
SAPP Academy
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Hotline: 0889 66 22 76 (HN)
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi 0889 66 22 67 (HCM)
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City Website: Sapp.edu.vn

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