Comparable balance sheets are presented below: Dec. 31, 2015 Dec. 31, 2014 Assets Cash 1.2 1.9 Accounts Receivable 0.4 0.3 Inventory 1.3 1.0 Property, Plant & Equipmen 6.0 3.0 Less: Accumulated Depreciation (0.8) (0.4) 8.1 5.8 Liabilities & Stockholder's Equity Accounts Payable 2.6 2.1 Dividends Payable - - Bonds Payable 4.4 2.8 Common Stock, $1 Par Value 0.2 0.1 Paid-in Capital in Excess of Par Value 3.2 2.2 Retained Earnings (2.3) (1.4) 8.1 5.8 Additional Information: 1. The change in PP&E represent cash expenditures for a new factory 2. There were no disposals of PP&E during the year 3. There were no dividends declared during the year 4. The common stock was issued for cash 5. A review of the income statement noted a gross profit margin of 20% and Research & Development costs of $0.7 for the year Required: 1. Prepare a statement of cash flows using the indirect method

ANSWER: Cash Flow statement

QUESTION: WHY IS THE NET PROFIT .90

Net Profit		(0.90)
Add :
Depreciation Expenses	0.40	0.40
Increase in Account Receivable	(0.10)
Increase in Inventory	(0.30)
Increase in Account Payable	0.50	0.10
Net Cash Flow from Operating Activities		(0.40)
Purchase of New Factory		(3.00)
Net Cash from Investing Activities		(3.00)
Issue of Common Stock
Common Stock	0.10
Paid in Capital in excess of Par Value	1.00	1.10
Issue of Bonds		1.60
Net Cash flow from Investing Activities		2.7
Net Increase in cash and Cash Equivalents		(0.70)
Beginning Cash Balance		1.90
Ending Cash Balance		1.20