The income statement for the year ended December 31, 2011, and the balance sheets at December 31, 2010, and December 31, 2011, for Craig’s Service Company are presented here.

1. Prepare a statement of cash flows for the year ended December 31, 2011, using (a) the direct method and (b) the indirect method.
2. Why is the statement of cash flows important to the company and to parties external to the company?
3. As a user, which format would you prefer—direct or indirect—and why?
4. Evaluate the way in which the company spent its cash during the year. Do you think the company is in a sound cash position?
5. Calculate the firm’s free cash flow for the most recentyear.

  • CreatedSeptember 01, 2014
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