The comparative statements of financial position of Menachem Corporation at the beginning and end of the year 2015 appear below.

Net income of €34,000 was reported, and dividends of €23,000 were paid in 2015. New equipment was purchased and none was sold.

Instructions

(a) Prepare a statement of cash flows for the year 2015.

(b) Compute the current ratio (current assets 4 current liabilities) as of January 1, 2015, and December 31, 2015, and compute free cash flow for the year 2015.

(c) In light of the analysis in (b), comment on Menachem’s liquidity and financial flexibility.

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MENACHEM CORPORATION STATEMENTS OF FINANCIAL POSITION Assets Equipment Less: Accumulated depreciation-equipment Accounts receivable Cash Total Equity and Liabilities Share capital-ordinary Retained earnings Accounts payable Total Dec. 31, 2015 Jan. 1, 2015 37,000 22,000 Inc./Dec. 15,000 Inc. (17,000) (11,000) 6,000 Inc. 106,000 88,000 18,000 Inc. 22,000 13,000 9,000 Inc. 148,000 112,000 100,000 80,000 20,000 Inc. 28,000 17,000 11,000 Inc. 20,000 15,000 5,000 Inc. 148,000 112,000