(650) Case-3 CASE STUDY ANAYSIS ACCT 412: FINANCIAL STATEMENT ANALYSIS Using the income statement and balance sheets of Butter Company below, Butter COMPANY Income Statement For Year Ended December 31, Year 9 Sales... $1,000 Cost of goods sold Depreciation expense (100) Sales and general expense. (100) Interest expense (50) Income tax expense. (40) Net income.. $ 60 Butter COMPANY Balance Sheets December 31, Year 9 and Year 8 Assets Year 8 Year 9 Cash $ 50 $ 60 Accounts receivable, net... 500 520 Inventory 750 770 Current assets 1,300 1,350 Fixed assets, net 500 550 Total assets $1,800 $1,900 $ 100 $ 75 590 615 10 20 Liabilities and Equity Notes payable to banks... Accounts payable Interest payable. Current liabilities Long-term debt. Deferred income tax.. Capital stock Retained earnings Total liabilities and equity... 700 300 710 350 300 310 .400 400 100 130 $1,800 $1,900 a. Prepare a statement of cash flows for the year ended December 31, Year 9, using the direct method. b. Discuss, from an analyst's viewpoint, the results and effects of various events in cash flow statement by i. Operational cash flow ii. Investment cash flow iii. Financial cash flow c. Compute and interpret solvency ratios