Statement of Cash Flows Indirect Method
The comparative balance sheets for Lopez Ceramics, Inc., for December 31, 2010 and 2009, are as shown below:
During 2010, the company had net income of $48,000 and building and equipment depreciation expenses of $40,000 and $30,000, respectively. It amortized intangible assets in the amount of $10,000; purchased investments for $58,000; sold investments for $75,000, on which it recorded a gain of $17,000; issued $120,000 of long-term bonds at face value; purchased land and a warehouse through a $160,000 mortgage; paid $20,000 to reduce the mortgage; borrowed $30,000 by issuing notes payable; repaid notes payable in the amount of $90,000; declared and paid cash dividends in the amount of $18,000; and purchased treasury stock in the amount of $10,000.
1. Using the indirect method, prepare a statement of cash flows for Lopez
2. Compute and assess cash flow yield and free cash flow for 2010. If required, use the minus sign to indicate a negative free cash flow. If an amount is not meaningful, enter “0”.