Case -1 CASE STUDY ANAYSIS ACCT 412: FINANCIAL STATEMENT ANALYSIS The financial statements of Global Company appear below: GLOBAL COMPANY Comparative Balance Sheet December 31 2017 2016 Assets Cash $ 36,000 $ 23,000 Accounts receivable 25,000 34,000 Merchandise inventory 32,000 15,000 Property, plant, and equipment 50,000 78,000 Accumulated depreciation (21.000) (24.000) Total $122.000 $126.000 Liabilities and Stockholders' Equity Accounts payable $ 18,000 $ 23,000 Income taxes payable 9,000 8,000 Bonds payable 8,000 33,000 Common stock 28,000 24,000 Retained earnings 59,000 38,000 Total $122.000 $126.000 GLOBAL COMPANY Income Statement For the Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $400,000 270,000 130,000 45.000 85,000 5.000 80,000 24,000 $ 56,000 The following additional data were provided: 1. Dividends declared and paid were $35,000. 2. During the year, equipment was sold for $17,000 cash. This equipment cost $28,000 originally and had a book value of $17,000 at the time of sale. 3. All depreciation expense is in the operating expenses. 4. All sales and purchases are on account. 5. Accounts payable pertain to merchandise suppliers. 6. All operating expenses except for depreciation were paid in cash. Required 1) Prepare a statement of cash flows for GLOBAL Company using the direct method. 2) 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