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Chapter Four Homework Assignment On pages 154 and 155 of our text, you will find financial statements for Castillo Products Company 1. Using the 2016 income statement and the balance sheets, prepare a statement of cash flows Here's a tip: Compare the 2016 net income to the change in retained earnings from 2015 to 2016. If the change in retained earnings is less than net profit, they paid dividends to the owners. 2. Using the 2016 income statement, calculate the EBDAT breakeven point. Show your math. 3. From your calculations, the financial statements provided, and the description in the text, what advice related your findings in questions one and two would you share with the owners? Show critical thinking here - more than the obvious. CASTILLO PRODUCTS COMPANY 2016 2015 BALANCE SHEET Cash Accounts receivable Inventories Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets $ 50,000 200,000 400,000 650,000 450,000 -100,000 350,000 $1,000,000 $ 20,000 280,000 500,000 800,000 540,000 -140,000 400,000 $1,200,000 Accounts payable Accruals Bank loan Total current liabilities Long-term debt Common stock ($.01 par) Additional paid-in-capital Retained earnings Total liabilities and equity $ 130,000 $ 160,000 50,000 70,000 90,000 100,000 270,000 330,000 300,000 400,000 150,000 150,000 200,000 200,000 80,000 120,000 lbs $1,000,000 $1,200,000 br do O CASTILLO PRODUCTS COMPANY INCOME STATEMENT 2015 2016 $900,000 -540,000 360,000 -90,000 -250,000 Net sales Cost of goods sold Gross profit Marketing General and administrative Depreciation EBIT Interest Earnings before taxes Income taxes Net income (loss) _-40,000 $1,500,000 -900,000 600,000 -150,000 -250,000 -40,000 160,000 -60,000 100,000 -25,000 $ 75,000 -20,000 -45,000 -65,000 0 -$ 65,000 *Includes tax loss carryforward from 2015