What your students see

The statements tell a story worth explaining

At the deadline, the quarter closes on its own and the new statements arrive. Alpha's net income jumped to $14.2M. Cash rose by only $7.6M.

The cash flow statement and the notes explain the gap. $6.2M went out as dividends, $2.6M more went into inventory, with materials still on their way from the supplier counted as the firm's own under FOB shipping point, and $3.0M more is owed by customers. It's partly offset by $3.3M more owed to suppliers. And customers ordered 3,434 more units than Alpha could deliver.

The point for your course

Profit is not cash. Students find out why from their own firm, not a textbook example.

Back Next Step 4 of 9

Student › Spring Section B › Alpha Maria Chen · Student

Quarter 4 results

Measure	Quarter 3	Quarter 4
Net revenue	$59,455,621.19	$74,768,048.08
Net income	$9,240,586.71	$14,242,033.21
Cash at quarter end	$25,736,235.55	$33,371,264.78
Inventory	$12,338,700.00	$14,925,808.27

Cash flow, Quarter 4 (selected lines)

Net income	$14,242,033.21
Add back depreciation	$2,415,000.00
Increase in inventory	($2,587,108.27)
Increase in accounts receivable	($3,001,235.67)
Increase in accounts payable	$3,331,504.00
Dividends paid	($6,153,664.58)

Inventory note

Customers ordered 262,557 units and 259,123 were sold. 3,075 units are left in stock. Materials in transit from the supplier: $14,420,890.00, owned from shipment under FOB shipping point.

Every figure in this tour comes from a practice run of a reference course, played by the same engine a class uses, with the Careful, Average and Careless reference teams over 11 quarters. Names of students, instructors and firms are made up.