Mankota Ltd. (Mankota) produces precision equipment for the mining industry. The company is private and has two shareholders. Mankota has been hugely successful in the last few years with high de mand from mining companies around the world. Its production facility runs at full capacity but it's still unable to keep up with customer demand. The owners want to expand because they're concerned that Mankota won't capitalize on market oppor tunities and will lose market share to competitors, even those with inferior prod ucts. Mankota's sales have increased by almost 300 percent over the last few years and profits have increased from $750,000 in 2015 to $5.9 million in the year ended December 31, 2018. Despite its success, Mankota is using up cash very quickly and management is worried that it won't have enough cash to operate effectively and expand to meet demand. You have been provided with Mankota's cash flow statements for the years ended December 31, 2017 and 2018. Prepare a report to management explaining the reasons for the company's cash problems despite its profitability.
Management has also asked for any suggestions you might have to improve the situation.

Prepare thereport.

  • CreatedFebruary 26, 2015
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