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DB 4 - Research Paper Example
Author : germanward
Finance & Accounting
Pages 3 (753 words)
RadioShack Corporation Financial Analysis Name: Instructor: Date: RadioShack Corporation Financial Analysis Question 1 From the annual balance sheet statement of RadioShack Corporation, the cost of inventory on hand that is same as closing inventory for the year ending on December 31, 2010 amounts to $723,700,000…
Cost of inventory at hand + cost of inventory purchased – beginning inventory = purchases of inventory (Albrecht, Stice, & Stice, 2011). Beginning inventory for the year 2010 has been assumed equal to the cost of inventory on 31 December 2009. Thus, inventory purchases in 2010 = $724+ $2,462- $670, = $2,516 Question 2 From the three computed components of inventory in the corporation, the inventory component that is mainly directly related to the cash flow movement is the purchases. This is because, when the firm purchases the inventory on cash or banking basis, the cash and cash equivalent in the cash flow statement for the trading period is lowered (Harrison & Horngren, 2008). Indeed, RadioShack Corporation acquires it electronic inventories through the banking transfer instead of account purchasing process. Thus, whenever the organization acquires additional inventories, the cash flow statement is amended to reflect the actual cash and cash equivalent the firm possesses. Question 3 If the inventory purchases are responsible for the account payable provision in the balance sheet of RadioShack Corporation, then, to compute the cash payment that was made in 2010, the account payable for 2009 and 2010 as well as the inventory purchases made in 2010 2ill be used to estimate the cash payments made during the year. Accordingly, the following formula will be applied. ...