Question

The consolidated statements of cash flows and related note disclosure for Big Rock Brewery Inc. are in Exhibits 5-17A and B.
Required:
a. In total, how much did Big Rock’s cash and cash equivalents change during 2013? Was this an increase or a decrease? How did this compare with the previous year?
b. How did Big Rock’s net income in 2013 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 receivable have on cash flows from operating activities in 2013? What does this tell you about the balance owed by the company’s customers?
d. 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?
e. Calculate Big Rock’s net free cash flow for 2013 and 2012. Is the trend positive or negative?
f. How did the dividends paid by Big Rock to its shareholders compare with the company’s net income and cash flows from operating activities?
g. If you were a user of Big Rock’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 Big Rock? Do you think the company is growing rapidly?


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  • CreatedJune 11, 2015
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