The Following Information Is Based on the Financial Statements of Hadley

question 128

Essay

The following information is based on the financial statements of Hadley Company, a large manufacturer.Annual revenues are $65,387 million and net expenses (including income taxes) are $62,313 million.During the year, the firm collected $64,995 million in cash from customers and had cash outflows associated with payments to suppliers and vendors of $56,411 million.

REQUIRED:
a.Calculate net income and net cash flow for the year.
b.How can cash collected from customers be less than revenues?
c.How can cash payments to suppliers and vendors be less than expenses?

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Definitions:

Average Total Cost

The total cost divided by the quantity produced, representing the cost of producing each unit of output.

Long Run

A period in which all factors of production and costs are variable, allowing full adjustment to changes.

Demand Equals

A state in a market where the quantity of a good or service desired by buyers is equal to the quantity supplied by sellers, resulting in market equilibrium.

Marginal Cost

The added expenditure resulting from creating an additional product or service unit.