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22 Short-Term Financial Management Cost of goods Beginning accounts payable $0 $0 $500 Ending Beginning accounts payable inventory $600 $0 $600 $300 $300 $800 Ending inventory $1,200 $1,500 $500 b. c. sold $2,000 $3,000 $5,000 3/ Given the following balance sheets and income statement for Genesis Enterprises, Inc.: a Develop a cash flow statement b. Discuss why the cash position of the company is different from the profit of the company. Specifically, note that net profit was $425, but the cash account stayed the same. Cash Accounts receivable Inventory Fixed assets (Accumulated depr.) Total GENESIS ENTERPRISES, INC. BALANCE SHEET - 12/31/12 1000'S) $500 Accounts payable 750 Operating accruals 400 Debt 1,000 Common stock 400 Retained earnings $2,250 Total $200 300 1,000 500 250 $2,250 Cash Accounts receivable Inventory Fixed assets (Accumulated depr.) Total GENESIS ENTERPRISES, INC. BALANCE SHEET - 12/31/13 (000'S) $500 Accounts payable 2,000 Operating accruals 600 Debt 1,000 Common stock 700 Retained earnings $3,400 Total $950 275 1,000 500 675 $3,400 The Role of Working Capital 23 GENESIS ENTERPRISES, INC. INCOME STATEMENT 1/01/13-12/31/13 $9,000 4,500 4,500 Sales Cost of goods sold Gross profit Operating expenses: Salaries, Advertising, etc. Depreciation Operating profit Interest Taxes Net profit Dividends Addition to retained earnings 3,500 300 700 100 175 425 0 425