Using the above financial data, prepare the statement of cash flow for 2020 using the indirect method. What does the company’s statement of cash flow reveal about the business’s financial health?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Using the above financial data, prepare the statement of cash flow for 2020 using the indirect method. What does the company’s statement of cash flow reveal about the business’s financial health?

P3.23
Statement of Cash Flow. Presented below are the consolidated financial statements of The Brattle Corpora-
tion as of year-end 2020 and 2019.
THE BRATTLE CORPORATION
Consolidated Balance Sheets
As of Year-End
($ thousands)
2020
2019
Assets
Current assets
$ 450,000
$ 250,000
760,000
400,000
100,000
Cash.
Accounts receivable (net).
Inventory.
Prepaid expenses.
990,000
695,000
100,000
Total current assets
2,235,000
1,510,000
Investments in affiliate companies
100,000
Property and equipment.
Less: Accumulated depreciation.
800,000
(80,000)
1,310,000
(110,000)
Property & equipment (net).
1,200,000
720,000
Total assets
$3,535,000
$2,230,000
Transcribed Image Text:P3.23 Statement of Cash Flow. Presented below are the consolidated financial statements of The Brattle Corpora- tion as of year-end 2020 and 2019. THE BRATTLE CORPORATION Consolidated Balance Sheets As of Year-End ($ thousands) 2020 2019 Assets Current assets $ 450,000 $ 250,000 760,000 400,000 100,000 Cash. Accounts receivable (net). Inventory. Prepaid expenses. 990,000 695,000 100,000 Total current assets 2,235,000 1,510,000 Investments in affiliate companies 100,000 Property and equipment. Less: Accumulated depreciation. 800,000 (80,000) 1,310,000 (110,000) Property & equipment (net). 1,200,000 720,000 Total assets $3,535,000 $2,230,000
As of Year-End
(S thousands)
2020
2019
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable
Accrued expenses payable.
Dividends payable..
S 570,000
200,000
$ 500,000
220,000
70,000
Total current liabilities
840,000
720,000
Note payable-due in ten years.
500,000
Total liabilities..
720,000
1,340,000
Shareholders' equity
Common stock ($5 par value).
Additional paid-in-capital.
Retained earnings..
330,000
1,200,000
665,000
200,000
1,160,000
150,000
Total shareholders' equity
2,195,000
1,510,000
Total liabilities & shareholders' equity
$3,535,000
$2,230,000
THE BRATTLE CORPORATION
Consolidated Income Statement
For Year Ended
(S thousands)
2020
2019
Sales.
Cost of goods sold.
$16,820,000 $12,000,000
14,015,000
10,400,000
Gross margin
Selling & administrative expenses
Depreciation expense...
Income tax expense.
2,805,000
1,930,000
30,000
240,000
1,600,000
1,048,000
20,000
152,000
Net Income.
$ 605,000
$ 380,000
Transcribed Image Text:As of Year-End (S thousands) 2020 2019 Liabilities & Shareholders' Equity Current liabilities Accounts payable Accrued expenses payable. Dividends payable.. S 570,000 200,000 $ 500,000 220,000 70,000 Total current liabilities 840,000 720,000 Note payable-due in ten years. 500,000 Total liabilities.. 720,000 1,340,000 Shareholders' equity Common stock ($5 par value). Additional paid-in-capital. Retained earnings.. 330,000 1,200,000 665,000 200,000 1,160,000 150,000 Total shareholders' equity 2,195,000 1,510,000 Total liabilities & shareholders' equity $3,535,000 $2,230,000 THE BRATTLE CORPORATION Consolidated Income Statement For Year Ended (S thousands) 2020 2019 Sales. Cost of goods sold. $16,820,000 $12,000,000 14,015,000 10,400,000 Gross margin Selling & administrative expenses Depreciation expense... Income tax expense. 2,805,000 1,930,000 30,000 240,000 1,600,000 1,048,000 20,000 152,000 Net Income. $ 605,000 $ 380,000
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