What conclusions could you arrive at regarding the cash position of the firm?

Statement of Cash Flows Analysis

You are given the following information for Barko Industries:

Barko Industries
Balance Sheet (Partial)
Year 3
Year 4
Cash
$70,000
$9,640
AR
70,000
85,000
Inventories
87,000
84,000
Accounts Payable
48,000
51,000

 

Barko Industries
Income Statement
For the Year Ending December 31, Year 4
Sales
$560,000
Operating Expenses
$420,000
Depreciation Expense
46,000
466,000
Income Before Taxes
$94,000
Income Tax Expense
$37,600
Net Income
$56,400

Other Data:

  • Barko Industries sold an asset and recorded a loss on the sale of $8.700. The sale price was $220,000 and the asset was originally purchased for $360,000.
  • Dividends paid in Year 4 were $22, 460.

Required:

  1. Prepare a statement of cash flows for the year ending December 31, Year 4 using the indirect method.
  2. What conclusions could you arrive at regarding the cash position of the firm?
  3. What information was provided in the statement of cash flows that was not evident if just the balance sheet and the income statement were examined?

Part Two:  Final Project Week 3: Investing and Financing Activities; Interim Presentation of Findings

Examine the statement of cash flows for the companies you selected in Week 1 for the most recent year. Address the following concerns:

  1. What are the two largest investing activities and financing activities for each firm?
  2. Compare and contrast the investing and financing activities of the two companies.
  3. Evaluate the investing and financing strategies of the two firms? Provide a rationale for your opinion as to the effectiveness of each of the strategies.

Required:

  1. Address the above-noted questions.
  2. Prepare a Microsoft PowerPoint presentation of 5-10 slides that summarizes your findings for the two companies for Weeks 1 to 3 of the Final Project.

Part 1 should be in an Excel document

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