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Peer review #3
Review your fellow classmates assignments and do a peer-
review at least 200 words per student review.
Remember to answer as “first person”, do you agree or disagree
with your classmates assignment.
Student #1
In 2016, the FAA amended its regulations to allow the operation
of small unmanned aircraft systems in the National Airspace
System (NAS). These changes address the operation of
unmanned aircraft systems and certification of their remote
pilots. The amended rules, 14 CFR Part 107, provide for
individuals to obtain their Remote Pilot Certificate, as well as
operating rules for drone operators who do not fall into
recreational drone operations. Part 107 defines permissible
hours of flight, line-of-sight observation, altitude, operator
certification, optional use of visual observers, aircraft
registration and marking, and operational limits.
Because federal registration is the exclusive means for
registering UAS for purposes of operating an aircraft in
navigable airspace, no state or local government may impose an
additional registration requirement on the operation of UAS in
navigable airspace without first obtaining FAA approval. One
example of a local government that tried to impose additional
regulation is the case of Singer v. City of Newton, where a
Massachusetts district court found a portion of local drone
ordinance preempted by FAA regulation. Michael Singer, a
physician, had hoped to use small unmanned aircraft to deliver
medical services but in December 2016, the city passed an
ordinance that would have made any such project impossible.
The ordinance imposed conditions on the operation of pilotless
aircraft, in addition to those already imposed by the FAA.
Singer said that he could not comply with both sets of rules and
still fly his drones so he sued to prevent the city from enforcing
the ordinance, challenging four provisions in particular: (1) the
requirement that all owners register their pilotless aircraft with
the city clerk’s office; (2) the ban on flight below 400 feet over
private property without the landowner’s consent; (3) the ban on
flight over any city or school property without the city’s
permission; and (4) the requirement that aircraft in flight remain
within the operator’s line of sight (Harvardlawreview, 2018).
He argued that federal regulations passed under the Federal
Aviation Act of 1958 preempted these restrictions. In the end,
Singer won the case and the judge invalidated the city’s
proposed ordinances.
Having that said, certain states have imposed their own
laws that supplement Part 107 federal law and contain certain
restrictions that are state-specific. For example, Florida Senate
Bill 766 “Surveillance by a Drone”, prohibits the use of a drone
to capture an image of privately-owned property or the owner,
tenant, or occupant of such property without consent if a
reasonable expectation of privacy exists (Florida Senate, 2015).
Other states such as Georgia, have even passed laws that pre-
empt local governments in the state from creating UAS
regulations (Georgia General Assembly, 2019).
In our case, it would really depend on what state the
incident occurred in and what specific law applied at the time.
If this happened in a state that had no specific laws that further
regulate drone operations, then I would certainly dispute it in
court since only Part 107 rules would apply. If, however, I
happened to be somewhere where additional, more restrictive
state laws applied, then I would certainly pay the fine and
blame myself for not properly researching the law. In the end, it
all comes down to the operator being responsible for knowing
all the rules that apply and making sure that proper research has
been done prior to going out and flying. While Part 107 covers
federal law on UAS operations, some states have implemented
additional, more restrictive rules that operators need to be
familiar with, and abide by when flying in their territory.
References
Florida Senate (2015). Senate Bill 766 - The Florida Senate.
Retrieved from
http://www.flsenate.gov/Session/Bill/2015/0766
Georgia General Assembly. (2019). House Bill 481 -
UAS/Provide for Preemption. Retrieved from
http://www.legis.ga.gov/legislation/en-US
Harvardlawreview (2018). Singer v. City of Newton. Retrieved
from https://harvardlawreview.org/2018/05/singer-v-city-
of-newton/
Answer:
Student #2
The Remote Pilot Certification allows an operator to fly a small
Unmanned Aerial Vehicle (UAV) for work or business purposes
under Code of Federal Regulations (CFR) Title 14 Part 107. The
drone must be 55 lbs or less and all operations must meet
regulations. Part 107 covers the regulations, operational
requirements, and procedures that must be followed in order to
be in compliance (Getting Started, 2019). Although the Remote
Pilot Certification allows an operator to fly a drone in the
airspace for business purposes, local regulations and flight
restrictions must be followed.
In 2016, the Federal Aviation Administration (FAA)
relinquished its control over state laws when it comes to
Unmanned Aerial Systems (UAS). The FAA “acknowledges the
important role of state and local regulation” (New FAA drone,
2016) on UAS. With this ruling, municipalities have the ability
to pass and enforce local ordinances to regulate the use of the
airspace, unlike with manned aircraft. In 1958, President
Dwight D. Eisenhower passed the Federal Aviation Act, which
gives the federal government authority over the national
airspace, preventing local municipalities to create the same
restrictions on manned aircraft (A Brief History of the FAA,
2017).
Over the past decade, there has been significant growth
in the UAV industry. As a result, the FAA has passed
regulations and procedures that must be followed to operate the
aerial vehicles. Additionally, “The United States has witnessed
a growing trend of state and local drone-specific regulations
that extend beyond the guidelines and restrictions established
for non-recreational and recreational drone users by the Federal
Aviation Administration (FAA)” (Michel, 2017). These local
ordinances prohibit flying over someone else’s property, public
land, and the use of UAVs for surveillance. In many cases,
ordinances have been imposed due to drone accidents.
According to Michel (2017), “the adoption of these rules is
largely motivated by a sense that the FAA’s regulations are not
comprehensive and strict enough to prevent potential abuses of
the technology” (p. 3). The public perception of UAVs has
pushed for local ordinances to be created in order to prevent the
public’s safety and privacy.
In the case above, the penalty is legitimate. Although
all the proper channels were followed in order to obtain the
Remote Pilot Certification to fly the drone it is up to the
operator to fully comply with all the regulations in Part 107.
Title 14 CFR Subpart B 107.49, known as Preflight
familiarization, inspection, and actions for aircraft operation,
states:
Prior to flight, the remote pilot in command must: (a) Assess
the operating environment, considering risks to persons
and property in the immediate vicinity both on the surface and
in the air. This assessment must include: (2) Local
airspace and any flight restrictions (eCFR, n.d.)
Therefore it is the operator’s responsibility to know the local
ordinances in order to prevent such events from happening. As a
result, I would have accepted the penalty as legitimate. In the
future, following the PAVE checklist from the Aeronautical
decision-making (ADM) approach would be beneficial to the
pilot in preventing the situation from reoccurring. The PAVE
checklist is a useful tool that runs the pilot through four key
areas: pilot, aircraft, environment (including airspace), and
external pressures (FAA, 2016). By utilizing this preflight
checklist, the local airspace regulations would have been
checked, which would have prevented the scenario.
References
A Brief History of the FAA. (2017, January 4). Retrieved
from https://www.faa.gov/about/history/brief_history/Links to
an external site..
eCFR - Code of Federal Regulations. (n.d.). Retrieved from
https://www.ecfr.gov/cgi-bin/text-
idx?SID=e331c2fe611df1717386d29eee38b000&mc=true&node
=pt14.2.107&rgn=div5#se14.2.107_147.Michel, Arthur H.
Drones At Home. (2017). Local and State Drone Laws [PDF
file]. Retrieved
from https://dronecenter.bard.edu/files/2017/03/CSD-Local-and-
State-Drone-Laws-1.pdfLinks to an external site.
Federal Aviation Administration (FAA). (2016, August).
Remote Pilot - Small Unmanned Aircraft Systems Study Guide.
Retrieved
from https://www.faa.gov/regulations_policies/handbooks_manu
als/aviation/media/remote_pilot_study_guide.pdfLinks to an
external site.
Getting Started. (2019, May 17). Retrieved
from https://www.faa.gov/uas/getting_started/Links to an
external site..
Michel, Arthur H. (2017, March). Drones At Home [PDF file].
Retrieved from https://dronecenter.bard.edu/files/2017/03/CSD-
Local-and-State-Drone-Laws-1.pdfLinks to an external site.
New FAA drone rules reject federal preemption of state and
local drone laws. (2016, Jun 23). Targeted News Service
Retrieved
from http://ezproxy.libproxy.db.erau.edu/login?url=https://searc
h-proquest-
com.ezproxy.libproxy.db.erau.edu/docview/1799329713?accoun
tid=27203Links to an external site.
Answer:
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
Chapter 10
Statement of Cash Flows
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
2
Uses a concept of cash that includes not only cash but also
short-term, highly liquid investments
Referred to as the cash and cash equivalent focus
Explains the changes in focus accounts
Basic Elements of the Statement of Cash Flows
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
Uses of the statement of cash flows
Internal (management) users
Determine dividend policy
Evaluate cash generated by operations
Review investing and financing policy
External users
Determine a firm’s ability to increase dividends
Determine a firm’s ability to pay debt from operations
Determine the percentage of cash from operations in relation to
the cash from financing
Basic Elements of the Statement of Cash Flows—Continued
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
4
Structure of the Statement of Cash FlowsCash Flows from
Operating ActivitiesAdd:Cash Flows from Investing
ActivitiesAdd:Cash Flows from Financing ActivitiesChange in
CashBeginning Cash BalanceAdd:Change in cashEnding Cash
Balance Supplemental disclosure: Noncash investing and
financing activities
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
5
Operating Activities
Cash inflows from
Sale of goods or services
Returns on loans (interest)
Return on equity securities (dividends)
Cash outflows for payments
For acquisitions of inventory
To employees
For taxes
For interest expenses
For other expenses
Include the cash effects of events that enter into the
determination of net income
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
6
Investing Activities
Cash inflows from
Receipts from loans collected
Sales of debt or equity securities of other corporations
Sale of property, plant, and equipment
Cash outflows for
Loans to other entities
Investment in debt or equity securities of other entities
Purchase of property, plant, and equipment
Lending and collecting money and acquiring and selling
investments and long-term assets
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
7
Financing Activities
Cash inflows from
Sale of equity securities
Sale of bonds, mortgages, notes, and other short- and long-term
borrowings
Cash outflows for
Payment of dividends
Reacquisition of capital stock
Payment of amounts borrowed
Include cash flows relating to liability and owners’ equity
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
8
Direct method
Converts the income statement from accrual basis to a cash
basis
Encouraged by SFAS No. 95
Supplemental information required
Reconciliation of net income to cash provided by operations
Indirect method
Adjusts net income for items that affected net income but did
not affect cash
Supplemental information required
Cash paid for income taxes and for interest
Presentation of Cash Flows From Operations
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
9
Exhibit 10-1—Statement of Cash Flows: Direct Method
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
10
Exhibit 10-1—Statement of Cash Flows: Direct Method
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
11
Exhibit 10-1—Statement of Cash Flows: Indirect Method
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
12
Exhibit 10-1—Statement of Cash Flows: Indirect Method
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
13
Traditional ratios related income statement item(s) to a balance
sheet item(s)
Statement of cash flows became a required statement in 1987
Cash flow financial ratios were slowly developed
Operating cash flow to current maturities of debt
Operating cash flow to total debt
Operating cash flow per share
Operating cash flow to cash dividends
Financial Ratios and the
Statement of Cash Flows
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
14
Indicates a firm’s ability to meet its current maturities of debt
Higher ratio indicates better liquidity
Operating Cash Flow to Current Maturities of Debt
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
15
Indicates a firm’s ability to cover total debt with the yearly
operating cash flow
The higher the ratio, the better the firm’s ability to carry its
total debt
Conservative approach is to include all possible balance sheet
debt
Operating Cash Flow to Total Debt
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
16
Indicates the funds flow per common share outstanding
Higher than earnings per share as depreciation is not deducted
Operating Cash Flow per Share
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
17
A better indication of a firm’s ability to make capital
expenditure decisions and pay dividends than is earnings per
share
Does not reflect firm’s profitability
Firms are prohibited from reporting this on financial statements
Operating Cash Flow per Share—Continued
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
18
Indicates a firm’s ability to cover cash dividends with the
yearly operating cash flow
Higher the ratio, the better the firm’s ability to cover cash
dividends
Operating Cash Flow to Cash Dividends
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
19
No standard definition of cash flow
Alternative definition
Net income plus depreciation expense
Less useful than the net cash flow from operating activities
Alternative Cash Flow
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
20
Analyze all balance sheet accounts other than cash and cash
equivalents.
Procedures to Develop the Statement of Cash
FlowsIncreaseDecreaseCurrent assetsOperating
outflowOperating inflowNoncurrent assetsInvesting
outflowInvesting inflowCurrent liabilitiesOperating
inflowOperating outflowLong-term liabilitiesFinancing
inflowFinancing outflowStockholders’ equityFinancing
inflowFinancing outflow
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
21
Three techniques used to prepare the statement of cash flows
The visual method
Determine change in cash and cash equivalents
Compute the net change in all other balance sheet accounts
Classify as operating, investing, and financing
The T-account method
The worksheet method
Procedures to Develop the
Statement of Cash Flows
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
22
Operating section describes income statement accounts in terms
of receipts or payments
Cash receipts
From customers
From other operating sources
Cash payments
For merchandise
To employees
For other operating expenses
Procedures to Develop Operating Cash Flows: Direct Approach
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
23
Begin with net income
Add or deduct adjustments to change accrual basis net income
to cash basis net income
Changes in current noncash assets
Changes in noncash assets go in the inverse direction of
changes in cash
Changes in current liabilities
Changes in noncash liabilities go in the same direction of
changes in cash
Procedures to Develop Operating Cash Flows: Indirect
Approach
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
24
Adjust net income (loss) for noncash expenses (like
depreciation expense) and noncash revenues
Eliminate non cash gains and losses that relate to investing and
financing activities
Procedures to Develop Operating Cash Flows: Indirect
Approach
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
© 2013 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a password-protected website for
classroom use.
25
Operating Cash Flow
Current Maturities of Long-Term Debt and
Current Note Payable
Operating Cash Flow
Total Debt
Operating Cash
Operating Cash Flow Preferred Dividends
=
Flow per Share
Diluted Weighted Average Common
Shares Outstanding
æö
-
ç÷
èø
Operating Cash Flows
Cash Dividends
Week 2 - Assignment: Assess the Components of Cash Flow
Statements
Research the development, components and the analyses of the
statement of cash flows. You will need to become very familiar
with the statement of cash flows and the components in order to
successfully respond to the questions listed below. Your
analysis of cash flow should address the following points:
1. Present and describe the components of the statement of cash
flows. Use illustrative numerical examples to clarify the
discussion.
2. Describe the two alternative methods to develop and present
the statement of cash flows.
3. Using one of the two methods, discuss how the different
components of the statement of cash flows either serve to
increase or decrease the cash account. Discuss what meaning
this can have for the analyst.
4. Identify two Statements of cash flow for two different
companies. You might find these companies within the textbook
or more basically gather the information from the financial
statements of two known companies by looking through their
web sites (investor relations) Compare the two statements and
offer insight for which of the statements seems to represent a
stronger company. Discuss.
Support your paper with a minimum of five (5) external
resources In addition to these specified resources, other
appropriate scholarly resources, including older articles, may be
included.
Length: 5-7 pages not including title and reference pages
Your paper should demonstrate thoughtful consideration of the
ideas and concepts presented in the course and provide new
thoughts and insights relating directly to this topic. Your
response should reflect scholarly writing and current APA
standards.

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Peer review #3Review your fellow classmates assignments and do.docx

  • 1. Peer review #3 Review your fellow classmates assignments and do a peer- review at least 200 words per student review. Remember to answer as “first person”, do you agree or disagree with your classmates assignment. Student #1 In 2016, the FAA amended its regulations to allow the operation of small unmanned aircraft systems in the National Airspace System (NAS). These changes address the operation of unmanned aircraft systems and certification of their remote pilots. The amended rules, 14 CFR Part 107, provide for individuals to obtain their Remote Pilot Certificate, as well as operating rules for drone operators who do not fall into recreational drone operations. Part 107 defines permissible hours of flight, line-of-sight observation, altitude, operator certification, optional use of visual observers, aircraft registration and marking, and operational limits. Because federal registration is the exclusive means for registering UAS for purposes of operating an aircraft in navigable airspace, no state or local government may impose an additional registration requirement on the operation of UAS in navigable airspace without first obtaining FAA approval. One example of a local government that tried to impose additional regulation is the case of Singer v. City of Newton, where a Massachusetts district court found a portion of local drone ordinance preempted by FAA regulation. Michael Singer, a physician, had hoped to use small unmanned aircraft to deliver medical services but in December 2016, the city passed an ordinance that would have made any such project impossible. The ordinance imposed conditions on the operation of pilotless
  • 2. aircraft, in addition to those already imposed by the FAA. Singer said that he could not comply with both sets of rules and still fly his drones so he sued to prevent the city from enforcing the ordinance, challenging four provisions in particular: (1) the requirement that all owners register their pilotless aircraft with the city clerk’s office; (2) the ban on flight below 400 feet over private property without the landowner’s consent; (3) the ban on flight over any city or school property without the city’s permission; and (4) the requirement that aircraft in flight remain within the operator’s line of sight (Harvardlawreview, 2018). He argued that federal regulations passed under the Federal Aviation Act of 1958 preempted these restrictions. In the end, Singer won the case and the judge invalidated the city’s proposed ordinances. Having that said, certain states have imposed their own laws that supplement Part 107 federal law and contain certain restrictions that are state-specific. For example, Florida Senate Bill 766 “Surveillance by a Drone”, prohibits the use of a drone to capture an image of privately-owned property or the owner, tenant, or occupant of such property without consent if a reasonable expectation of privacy exists (Florida Senate, 2015). Other states such as Georgia, have even passed laws that pre- empt local governments in the state from creating UAS regulations (Georgia General Assembly, 2019). In our case, it would really depend on what state the incident occurred in and what specific law applied at the time. If this happened in a state that had no specific laws that further regulate drone operations, then I would certainly dispute it in court since only Part 107 rules would apply. If, however, I happened to be somewhere where additional, more restrictive state laws applied, then I would certainly pay the fine and blame myself for not properly researching the law. In the end, it all comes down to the operator being responsible for knowing all the rules that apply and making sure that proper research has been done prior to going out and flying. While Part 107 covers federal law on UAS operations, some states have implemented
  • 3. additional, more restrictive rules that operators need to be familiar with, and abide by when flying in their territory. References Florida Senate (2015). Senate Bill 766 - The Florida Senate. Retrieved from http://www.flsenate.gov/Session/Bill/2015/0766 Georgia General Assembly. (2019). House Bill 481 - UAS/Provide for Preemption. Retrieved from http://www.legis.ga.gov/legislation/en-US Harvardlawreview (2018). Singer v. City of Newton. Retrieved from https://harvardlawreview.org/2018/05/singer-v-city- of-newton/ Answer: Student #2
  • 4. The Remote Pilot Certification allows an operator to fly a small Unmanned Aerial Vehicle (UAV) for work or business purposes under Code of Federal Regulations (CFR) Title 14 Part 107. The drone must be 55 lbs or less and all operations must meet regulations. Part 107 covers the regulations, operational requirements, and procedures that must be followed in order to be in compliance (Getting Started, 2019). Although the Remote Pilot Certification allows an operator to fly a drone in the airspace for business purposes, local regulations and flight restrictions must be followed. In 2016, the Federal Aviation Administration (FAA) relinquished its control over state laws when it comes to Unmanned Aerial Systems (UAS). The FAA “acknowledges the important role of state and local regulation” (New FAA drone, 2016) on UAS. With this ruling, municipalities have the ability to pass and enforce local ordinances to regulate the use of the airspace, unlike with manned aircraft. In 1958, President Dwight D. Eisenhower passed the Federal Aviation Act, which gives the federal government authority over the national airspace, preventing local municipalities to create the same restrictions on manned aircraft (A Brief History of the FAA, 2017). Over the past decade, there has been significant growth in the UAV industry. As a result, the FAA has passed regulations and procedures that must be followed to operate the aerial vehicles. Additionally, “The United States has witnessed a growing trend of state and local drone-specific regulations that extend beyond the guidelines and restrictions established for non-recreational and recreational drone users by the Federal Aviation Administration (FAA)” (Michel, 2017). These local ordinances prohibit flying over someone else’s property, public land, and the use of UAVs for surveillance. In many cases, ordinances have been imposed due to drone accidents. According to Michel (2017), “the adoption of these rules is largely motivated by a sense that the FAA’s regulations are not comprehensive and strict enough to prevent potential abuses of
  • 5. the technology” (p. 3). The public perception of UAVs has pushed for local ordinances to be created in order to prevent the public’s safety and privacy. In the case above, the penalty is legitimate. Although all the proper channels were followed in order to obtain the Remote Pilot Certification to fly the drone it is up to the operator to fully comply with all the regulations in Part 107. Title 14 CFR Subpart B 107.49, known as Preflight familiarization, inspection, and actions for aircraft operation, states: Prior to flight, the remote pilot in command must: (a) Assess the operating environment, considering risks to persons and property in the immediate vicinity both on the surface and in the air. This assessment must include: (2) Local airspace and any flight restrictions (eCFR, n.d.) Therefore it is the operator’s responsibility to know the local ordinances in order to prevent such events from happening. As a result, I would have accepted the penalty as legitimate. In the future, following the PAVE checklist from the Aeronautical decision-making (ADM) approach would be beneficial to the pilot in preventing the situation from reoccurring. The PAVE checklist is a useful tool that runs the pilot through four key areas: pilot, aircraft, environment (including airspace), and external pressures (FAA, 2016). By utilizing this preflight checklist, the local airspace regulations would have been checked, which would have prevented the scenario. References A Brief History of the FAA. (2017, January 4). Retrieved from https://www.faa.gov/about/history/brief_history/Links to an external site.. eCFR - Code of Federal Regulations. (n.d.). Retrieved from https://www.ecfr.gov/cgi-bin/text- idx?SID=e331c2fe611df1717386d29eee38b000&mc=true&node =pt14.2.107&rgn=div5#se14.2.107_147.Michel, Arthur H.
  • 6. Drones At Home. (2017). Local and State Drone Laws [PDF file]. Retrieved from https://dronecenter.bard.edu/files/2017/03/CSD-Local-and- State-Drone-Laws-1.pdfLinks to an external site. Federal Aviation Administration (FAA). (2016, August). Remote Pilot - Small Unmanned Aircraft Systems Study Guide. Retrieved from https://www.faa.gov/regulations_policies/handbooks_manu als/aviation/media/remote_pilot_study_guide.pdfLinks to an external site. Getting Started. (2019, May 17). Retrieved from https://www.faa.gov/uas/getting_started/Links to an external site.. Michel, Arthur H. (2017, March). Drones At Home [PDF file]. Retrieved from https://dronecenter.bard.edu/files/2017/03/CSD- Local-and-State-Drone-Laws-1.pdfLinks to an external site. New FAA drone rules reject federal preemption of state and local drone laws. (2016, Jun 23). Targeted News Service Retrieved from http://ezproxy.libproxy.db.erau.edu/login?url=https://searc h-proquest- com.ezproxy.libproxy.db.erau.edu/docview/1799329713?accoun tid=27203Links to an external site. Answer: © 2013 Cengage Learning. All Rights Reserved. May not be
  • 7. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 10 Statement of Cash Flows © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 Uses a concept of cash that includes not only cash but also short-term, highly liquid investments Referred to as the cash and cash equivalent focus Explains the changes in focus accounts Basic Elements of the Statement of Cash Flows © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be
  • 8. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Uses of the statement of cash flows Internal (management) users Determine dividend policy Evaluate cash generated by operations Review investing and financing policy External users Determine a firm’s ability to increase dividends Determine a firm’s ability to pay debt from operations Determine the percentage of cash from operations in relation to the cash from financing Basic Elements of the Statement of Cash Flows—Continued © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 Structure of the Statement of Cash FlowsCash Flows from Operating ActivitiesAdd:Cash Flows from Investing ActivitiesAdd:Cash Flows from Financing ActivitiesChange in
  • 9. CashBeginning Cash BalanceAdd:Change in cashEnding Cash Balance Supplemental disclosure: Noncash investing and financing activities © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 Operating Activities Cash inflows from Sale of goods or services Returns on loans (interest) Return on equity securities (dividends) Cash outflows for payments For acquisitions of inventory To employees For taxes For interest expenses For other expenses Include the cash effects of events that enter into the determination of net income
  • 10. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 Investing Activities Cash inflows from Receipts from loans collected Sales of debt or equity securities of other corporations Sale of property, plant, and equipment Cash outflows for Loans to other entities Investment in debt or equity securities of other entities Purchase of property, plant, and equipment Lending and collecting money and acquiring and selling investments and long-term assets © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be
  • 11. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 Financing Activities Cash inflows from Sale of equity securities Sale of bonds, mortgages, notes, and other short- and long-term borrowings Cash outflows for Payment of dividends Reacquisition of capital stock Payment of amounts borrowed Include cash flows relating to liability and owners’ equity © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8
  • 12. Direct method Converts the income statement from accrual basis to a cash basis Encouraged by SFAS No. 95 Supplemental information required Reconciliation of net income to cash provided by operations Indirect method Adjusts net income for items that affected net income but did not affect cash Supplemental information required Cash paid for income taxes and for interest Presentation of Cash Flows From Operations © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 Exhibit 10-1—Statement of Cash Flows: Direct Method © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for
  • 13. use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 Exhibit 10-1—Statement of Cash Flows: Direct Method © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 Exhibit 10-1—Statement of Cash Flows: Indirect Method © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for
  • 14. use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 Exhibit 10-1—Statement of Cash Flows: Indirect Method © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 Traditional ratios related income statement item(s) to a balance sheet item(s) Statement of cash flows became a required statement in 1987 Cash flow financial ratios were slowly developed Operating cash flow to current maturities of debt Operating cash flow to total debt
  • 15. Operating cash flow per share Operating cash flow to cash dividends Financial Ratios and the Statement of Cash Flows © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 Indicates a firm’s ability to meet its current maturities of debt Higher ratio indicates better liquidity Operating Cash Flow to Current Maturities of Debt © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for
  • 16. use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 Indicates a firm’s ability to cover total debt with the yearly operating cash flow The higher the ratio, the better the firm’s ability to carry its total debt Conservative approach is to include all possible balance sheet debt Operating Cash Flow to Total Debt © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 Indicates the funds flow per common share outstanding Higher than earnings per share as depreciation is not deducted Operating Cash Flow per Share
  • 17. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 A better indication of a firm’s ability to make capital expenditure decisions and pay dividends than is earnings per share Does not reflect firm’s profitability Firms are prohibited from reporting this on financial statements Operating Cash Flow per Share—Continued © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product
  • 18. or service or otherwise on a password-protected website for classroom use. 18 Indicates a firm’s ability to cover cash dividends with the yearly operating cash flow Higher the ratio, the better the firm’s ability to cover cash dividends Operating Cash Flow to Cash Dividends © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 No standard definition of cash flow Alternative definition Net income plus depreciation expense Less useful than the net cash flow from operating activities Alternative Cash Flow
  • 19. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 Analyze all balance sheet accounts other than cash and cash equivalents. Procedures to Develop the Statement of Cash FlowsIncreaseDecreaseCurrent assetsOperating outflowOperating inflowNoncurrent assetsInvesting outflowInvesting inflowCurrent liabilitiesOperating inflowOperating outflowLong-term liabilitiesFinancing inflowFinancing outflowStockholders’ equityFinancing inflowFinancing outflow © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product
  • 20. or service or otherwise on a password-protected website for classroom use. 21 Three techniques used to prepare the statement of cash flows The visual method Determine change in cash and cash equivalents Compute the net change in all other balance sheet accounts Classify as operating, investing, and financing The T-account method The worksheet method Procedures to Develop the Statement of Cash Flows © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 Operating section describes income statement accounts in terms of receipts or payments Cash receipts From customers
  • 21. From other operating sources Cash payments For merchandise To employees For other operating expenses Procedures to Develop Operating Cash Flows: Direct Approach © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 Begin with net income Add or deduct adjustments to change accrual basis net income to cash basis net income Changes in current noncash assets Changes in noncash assets go in the inverse direction of changes in cash Changes in current liabilities Changes in noncash liabilities go in the same direction of changes in cash Procedures to Develop Operating Cash Flows: Indirect Approach
  • 22. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 Adjust net income (loss) for noncash expenses (like depreciation expense) and noncash revenues Eliminate non cash gains and losses that relate to investing and financing activities Procedures to Develop Operating Cash Flows: Indirect Approach © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25
  • 23. Operating Cash Flow Current Maturities of Long-Term Debt and Current Note Payable Operating Cash Flow Total Debt Operating Cash Operating Cash Flow Preferred Dividends = Flow per Share Diluted Weighted Average Common Shares Outstanding æö - ç÷ èø Operating Cash Flows Cash Dividends Week 2 - Assignment: Assess the Components of Cash Flow Statements Research the development, components and the analyses of the statement of cash flows. You will need to become very familiar with the statement of cash flows and the components in order to successfully respond to the questions listed below. Your analysis of cash flow should address the following points: 1. Present and describe the components of the statement of cash flows. Use illustrative numerical examples to clarify the discussion. 2. Describe the two alternative methods to develop and present the statement of cash flows. 3. Using one of the two methods, discuss how the different components of the statement of cash flows either serve to increase or decrease the cash account. Discuss what meaning this can have for the analyst.
  • 24. 4. Identify two Statements of cash flow for two different companies. You might find these companies within the textbook or more basically gather the information from the financial statements of two known companies by looking through their web sites (investor relations) Compare the two statements and offer insight for which of the statements seems to represent a stronger company. Discuss. Support your paper with a minimum of five (5) external resources In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included. Length: 5-7 pages not including title and reference pages Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards.