Case-3 CASE STUDY ANAYSIS ACCT 412: FINANCIAL STATEMENT ANALYSIS Using the income statement and balance sheets of Niagara Company below, NIAGARA COMPANY Income Statement For Year Ended December 31, Year 9 Sales. $1,000 Cost of goods sold (650) Depreciation expense... (100) Sales and general expense.. (100) Interest expense (50) Income tax expense .. (40) Net income $ 60 NIAGARA COMPANY Balance Sheets December 31, Year 9 and Year 8 Year 8 Year 9 9 Assets 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 Liabilities and Equity Notes payable to banks . $ 100 $ 75 Accounts payable 590 615 Interest payable. 10 20 Current liabilities 700 710 Long-term debt 300 350 Deferred income tax. 300 310 Capital stock 400 400 Retained earnings 100 130 Total liabilities and equity.... $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 Investment cash flow Financial cash flow