Finance Assigment

Assignment #2 Statement of Cash Flow Problem

Bob Smith founded the Ace Products Company in 2015. Year 2016 proved to be a test of the company’s ability to survive. However, sales increased rapidly in 2017 and the firm reported a net income after taxes of $75,000. Depreciation expenses were $40,000 in 2017. Following are the Ace Products Company’s balance sheets for 2016 and 2017.

ACE PRODUCTS COMPANY 2016 2017 Cash $50,000 $20,000 Accounts Receivables 200,000 280,000 Inventories 400,000 500,000 Total Current Assets 650,000 800,000 Gross Fixed Assets 450,000 540,000 Accumulated Depreciation -100,000 -140,000 Net Fixed Assets 350,000 400,000 Total Assets $1,000,000 $1,200,000 Accounts Payable $130,000 $160,000 Accruals 50,000 70,000 Bank Loan 90,000 100,000 Total Current Liabilities 270,000 330,000 Long-Term Debt 300,000 400,000 Common Stock 150,000 150,000 Paid-in-Capital 200,000 200,000 Retained Earnings 80,000 120,000 Total Liabilities & Equity $1,000,000 $1,200,000

A. Prepare a formal statement of cash flow for 2017 and identify the major cash

inflows and outflows that were generated by the company.

B. What is the firm’s cash build or burn for 2017?

C. Prepare a Sources/Uses Statement for 2017.

A. Cash from Operating Activities: ____________ Net from Operating Activities Cash from Investing Activities: _____________ Net from Investing Activities Cash from Financing Activities: _____________ Net from Financing Activities Total net cash increase (decrease) Cash at beginning of period Total net cash increase (decrease) Cash at end of period

B. Calculate Cash Build or Burn for 2017:

C. Sources/Uses Statement for 2017: