The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Macros
oft Corporation. MACROSOFT CORPORATION
Income Statement
For the Year Ended December 31, 2018
($ in millions)
Revenues and gains:
Sales $ 324.00
Gain on sale of cash equivalents 2.70
Gain on sale of investments 24.70 $ 351.40
Expenses and loss:
Cost of goods sold $ 127.00
Salaries 40.70
Interest expense 12.70
Insurance 20.70
Depreciation 10.70
Patent amortization 4.70
Loss on sale of land 6.70 223.20
Income before tax 128.20
Income tax expense 64.10
Net income $ 64.10
Reconciliation of Net Income to Net Cash Flows from Operating Activities ($ in millions)
Net income $ 64.10
Adjustments for noncash effects:
Depreciation expense 10.70
Patent amortization expense 4.70
Loss on sale of land 6.70
Gain on sale of investment (24.70 )
Decrease in accounts receivable 6.70
Increase in inventory (12.70 )
Increase in accounts payable 18.70
Decrease in bond discount 1.70
Increase in salaries payable 6.70
Decrease in prepaid insurance 4.70
Increase in income tax payable 10.70
Net cash flows from operating activities $ 98.00
Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows (direct method). (Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Amounts to be deducted should be indicated with a minus sign.)
Income Statement
For the Year Ended December 31, 2018
($ in millions)
Revenues and gains:
Sales $ 324.00
Gain on sale of cash equivalents 2.70
Gain on sale of investments 24.70 $ 351.40
Expenses and loss:
Cost of goods sold $ 127.00
Salaries 40.70
Interest expense 12.70
Insurance 20.70
Depreciation 10.70
Patent amortization 4.70
Loss on sale of land 6.70 223.20
Income before tax 128.20
Income tax expense 64.10
Net income $ 64.10
Reconciliation of Net Income to Net Cash Flows from Operating Activities ($ in millions)
Net income $ 64.10
Adjustments for noncash effects:
Depreciation expense 10.70
Patent amortization expense 4.70
Loss on sale of land 6.70
Gain on sale of investment (24.70 )
Decrease in accounts receivable 6.70
Increase in inventory (12.70 )
Increase in accounts payable 18.70
Decrease in bond discount 1.70
Increase in salaries payable 6.70
Decrease in prepaid insurance 4.70
Increase in income tax payable 10.70
Net cash flows from operating activities $ 98.00
Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows (direct method). (Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Amounts to be deducted should be indicated with a minus sign.)
1 answer:
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Answer:
a) The correlation coeffcient is given by:
And replacing we got:
b) For this case we can conclude that we have a strong, negative linear association between the two stock prices.
Explanation:
Part a
For this case we have the following info:
represent the sample deviation for the variable X
represent the sample deviation for the variable Y
represent the covariance between the variables X and Y
The correlation coeffcient is given by:
And replacing we got:
Part b
Describe the relationship between prices of these two stocks.
For this case we can conclude that we have a strong, negative linear association between the two stock prices.