Create a statement of cash flow for the Arrow Company for the years ended December 31, 2014 and December 31, 2015 from the balance sheets and income statement created in problem P1.32 from Chapter 1. Comment on your assessment of Arrow Company’s financial statements, based only on the company’s return on assets (levered).[Use end-of-year assets to compute return on assets.] Now, with the addition of Arrow’s statement of cash flow, comment on any financial concern you might now have that did not show up with only access to the balance sheet and income statement. Arrow’s first year of operations was 2014.

Problem P1.32:

Using the information in the below table, prepare a classified balance sheet for Arrow Company as of December 31, 2014 and December 31, 2015, along with multi-step income statements for the years then ended.

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Account Property, plant, and equipment (net) Long-term debt Depreciation expense.. Retained earnings Sales revenue... December 31, 2014 December 31, 2015 $ 735 $ 650 490 690 50 60 130 295 1,000 1,500 Income taxes 50 70 Current portion of long-term debt 50 70 Total current liabilities... 130 160 Inventory.... 125 300 Cost of goods sold.. 600 900 Cash... 100 140 Selling, general, and administrative expenses. 175 290 Other current assets... 40 40 Accounts receivable. 135 230 Interest expense.. Dividends.. Accounts payable. Common stock. 300 2288 50 20 25 90 300