Nick has made the decision to seek this outside financing in the form of new equity investments and bank loans. Naturally, new investors and the banks will require a detailed financial analysis. Your employer, Angus Jones & Partners, LLC, has asked you to examine the financial statements provided by Nick. Here are the balance sheets for the two most recent years and the most recent income statement:

Nick has also provided the following information: During the year the company raised $228,000 in new long-term debt and retired $197,000 in long-term debt. The company also sold $15,000 in new stock and repurchased $66,000 in stock. The company purchased $1,482,000 in fixed assets and sold $429,000 in fixed assets.

Angus has asked you to prepare the financial statement of cash flows and the accounting statement of cash flows. He has also asked you to answer the following questions: 1. How would you describe Warf Computers cash flows?

2. Which cash flow statement more accurately describes the cash flows at the company?

3. In light of your previous answers, comment on Nicks expansion plans.

WARF COMPUTERS Balance Sheet in thousands) 2015 2014 2015 2014 Current assets Current liabilities Cash and equivalents 452 39 l Accounts payable 519 485 668 Accrued expenses 247 716 401 Accounts receivable Inventories 64 I 663 Total current Other 92 78 abilities 766 886 Total current assets $1901 l,800 Long-term liabilities Deferred taxes 330 159 Fixed assets Long-term debt I,179 I, 48 Property, plant, and $4, 48 $3,179 Total long-term equipment abilities I,509 $I,307 Less accumulated 340 I,092 Stockholders' equity depreciation 21 21 Preferred stock Net property, plant, an $2,808 $2,087 126 126 Common stock equipment Intangible assets and others 793 709 794 779 Capital surplus Accumulated retained 2,478 $3.60 $2,796 I,603 Total fixed assets earnings 92 126 Less treasury stock $3,227 $2,403 Total equity Total liabilities and shareholders' equity $5.502 $4,596 $5,502 $4,596 Total assets