Assignment 2: Statement of Cash Flows Analysis and Final Project Week 3: Investing and Financing Activities; Interim Presentation of Findings

Part One: Statement of Cash Flows Analysis

You are given the following information for Barko Industries:

Barko Industries
Balance Sheet (Partial)
	Year 3	Year 4
Cash	$70,000	$9,640
AR	70,000	85,000
Inventories	87,000	84,000
Accounts Payable	48,000	51,000

Barko Industries
Income Statement
For the Year Ending December 31, Year 4
Sales		$560,000
Operating Expenses	$420,000
Depreciation Expense	46,000	466,000
Income Before Taxes		$94,000
Income Tax Expense		$37,600
Net Income		$56,400

Other Data:

• Barko Industries sold an asset and recorded a loss on the sale of $8.700. The sale price was $220,000 and the asset was originally purchased for $360,000.
• Dividends paid in Year 4 were $22,460.

Required:

1. Prepare a statement of cash flows for the year ending December 31, Year 4 using the indirect method.
2. What conclusions could you arrive at regarding the cash position of the firm?
3. Whatinformationwasprovidedinthestatementofcashflowsthatwasnotevidentifjustthebalancesheetandtheincomestatementwereexamined?Howmightthatinformationaffectmanagementdecisions?

PART 2

Part Two: Final Project Week 3: Investing and Financing Activities; Interim Report of Findings

Examine the statement of cash flows for the companies you selected in Week 1 for the most recent year. Address the following concerns:

(Toyota, Honda)

1. What are the two largest investing activities and financing activities for each firm?
2. Compare and contrast the investing and financing activities of the two companies.
3. Evaluate the investing and financing strategies of the two firms? Provide a rationale for your opinion as to the effectiveness of each of the strategies.