Comparable balance sheets are presented below: Dec. 31, 2015 Dec. 31, 2014 Assets Cash 1.2 1.9 Accounts Receivable 0.4 0.3 Inventory 1.3 1.0 Property, Plant & Equipmen 6.0 3.0
Comparable
Dec. 31, 2015 Dec. 31, 2014
Assets
Cash 1.2 1.9
Inventory 1.3 1.0
Property, Plant & Equipmen 6.0 3.0
Less:
8.1 5.8
Liabilities &
Accounts Payable 2.6 2.1
Dividends Payable - -
Bonds Payable 4.4 2.8
Common Stock, $1 Par Value 0.2 0.1
Paid-in Capital in Excess of Par Value 3.2 2.2
8.1 5.8
Additional Information:
1. The change in PP&E represent cash expenditures for a new factory
2. There were no disposals of PP&E during the year
3. There were no dividends declared during the year
4. The common stock was issued for cash
5. A review of the income statement noted a gross profit margin of
20% and Research & Development costs of $0.7 for the year
Required:
1. Prepare a statement of
2. Is the operating cash flow sustainable?
3. What are the major sources and uses of cash?
4. How are the operations being financed? Through earnings or other means?
Do you agree with this strtegy?
5. No dividends were declared. Why?
6. Why might the company be losing so much money? Do you agree with their strategy?
7. What are the risks to the company going forward?
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Net Income .90
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