Exhibits 5 14A and B contain the consolidated statements of cash
Exhibits 5-14A and B contain the consolidated statements of cash flows and related note disclosure for The Second Cup Ltd.
a. In total, how much did Second Cup’s cash and cash equivalents change during 2013? Was this an increase or a decrease? How did this compare with the previous year?
b. Did Second Cup have net income or a net loss in 2013? How did this compare with the cash flows from operating activities? What was the largest difference between these two amounts?
c. What effect did the change in the company’s accounts payable and accrued liabilities have on cash flows from operating activities in 2013? What does this tell you about the balance owed to these creditors?
d. Did the balance of outstanding gift cards increase or decrease during 2013? Was this considered to be an inflow or an outflow of cash?
e. Did Second Cup purchase property, plant, and equipment during 2013? Did the company receive any proceeds from the sale of property, plant, and equipment during the period?
f. Calculate Second Cup’s net free cash flow for 2013 and 2012. Is the trend positive or negative?
g. Second Cup’s total liabilities were $31,376 at December 28, 2013, and $31,980 at December 29, 2012.
Determine the company’s cash flows to total liabilities ratio. Comment on the change year over year.
h. If you were a user of Second Cup’s financial statements—a banker or an investor—how would you interpret the company’s cash flow pattern? How would you assess the risk of a loan to or an investment in Second Cup? Do you think the company is growing rapidly?
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