QUESTION 2 (50 MARKS) A. The Ammar Computer Inc. was founded 15 years ago by Ammar Tahleel a computer programmer. The small initial investment to start the company was made by Ammar Computer Inc. and his friends. Over the years, this same group has supplied the limited additional investment needed by the company in the form of both equity and short and long-term debt. Recently the company has developed an Electronic Device (ED). The ED uses sophisticated artificial intelligence algorithms that allow the user to speak naturally and have the computer input the text, correct spelling and grammatical errors, and format the document according to preset user guidelines. The ED even suggests alternative phrasing and sentence structure, and it provides detailed'stylistic diagnostics. Based on a proprietary, very advanced software/hardware hybrid technology, the system is a full generation beyond what is currently on the market. In order to introduce the ED, the company requires significant external investment. Ammar Computer Inc. has made the decision to seek this external financing in the form of new equity investments and bank loans. Naturally, new investors and the banks will require a detailed financial analysis. Here is the balance sheet and income statement for the two most recent years: Activate Windows 2018 Ammar Compute. Ine. BALANCE SHEET as at 31 December, 2019 (RM in thousands) Liabilities and Owner Assets 2019 2018 Equity 2019 Current assets (CA): Current Liabilities (CL): Cash and equivalents 290 251 Accounts receivable 459 428 Accounts Payable 262 Inventories 411 425 Notes Payable 71 Others 59 SO Accrued Expenses 158 Total current Total CA: 1219 1154 Liabilities: 891 245 66 257 568 Long term Liabilities: 261 2038 Deferred Taxes 212 103 Fixed assets: Property plant &equipment Less: Accum depreciation Total Property & equipment 859 700 Long term Debt 756 736 1772 1338 Total Long Liabilities 968 839 Intangible assets SON 45+ Total Fixed Assets 2280 1792 Owner's Equity Preferred Stock Common Stock Capital Surplus Accumulated Retain Earnings 13 81 509 13 80 1558 2161 121 20:40 LO2N 1620 Less treasury stock Total Owner's Equity 1539 Total Assets 3499 29.46 Total Liabilities and Owners Equity 3499 2946 Ammar Compute Inc. has also provided the following information: During the year the company raised RM18.000 in new long-term debt and retired RM 98.000 in long-term debt. The company also sold RM11.000 of new stock and repurchased RM 40,000 of stock. the company purchased RM 786.000 in fixed assets and sold RM 139.000 or fixed assets! Activate Windows 15 to Settiristo activate Win ne here to Ammar Computer Inc. Income Statement for the year ended 31" December, 2019 (RM in thousands) Sales 5000 Cost of goods sold Selling. General and Administrative expenses Depreciations Operating Income Other Income EBIT Interest Expenses Pretax Income Taxes Current Deferred Net Income Addition to retained earnings Dividends 3000 543 170 1287 48 1335 95 1240 386 109 495 745 533 212 Required: a. Prepare the financial statement of cash flows and the accounting statement of casti flows. (15 mark) b. Describe the strengths and weaknesses of Ammar Compute. Inc. cash flows. 15 marks) e. Compare which cash flow statement is more accurate in describing the cash flows of the company. 15 marks) b Activate Windows In light of your previour answers, comment on Ammar Computer Inc. expansion plans 10 marks) QUESTION 2 (50 MARKS) A. The Ammar Computer Inc. was founded 15 years ago by Ammar Tahleel a computer programmer. The small initial investment to start the company was made by Ammar Computer Inc. and his friends. Over the years, this same group has supplied the limited additional investment needed by the company in the form of both equity and short and long-term debt. Recently the company has developed an Electronic Device (ED). The ED uses sophisticated artificial intelligence algorithms that allow the user to speak naturally and have the computer input the text, correct spelling and grammatical errors, and format the document according to preset user guidelines. The ED even suggests alternative phrasing and sentence structure, and it provides detailed'stylistic diagnostics. Based on a proprietary, very advanced software/hardware hybrid technology, the system is a full generation beyond what is currently on the market. In order to introduce the ED, the company requires significant external investment. Ammar Computer Inc. has made the decision to seek this external financing in the form of new equity investments and bank loans. Naturally, new investors and the banks will require a detailed financial analysis. Here is the balance sheet and income statement for the two most recent years: Activate Windows 2018 Ammar Compute. Ine. BALANCE SHEET as at 31 December, 2019 (RM in thousands) Liabilities and Owner Assets 2019 2018 Equity 2019 Current assets (CA): Current Liabilities (CL): Cash and equivalents 290 251 Accounts receivable 459 428 Accounts Payable 262 Inventories 411 425 Notes Payable 71 Others 59 SO Accrued Expenses 158 Total current Total CA: 1219 1154 Liabilities: 891 245 66 257 568 Long term Liabilities: 261 2038 Deferred Taxes 212 103 Fixed assets: Property plant &equipment Less: Accum depreciation Total Property & equipment 859 700 Long term Debt 756 736 1772 1338 Total Long Liabilities 968 839 Intangible assets SON 45+ Total Fixed Assets 2280 1792 Owner's Equity Preferred Stock Common Stock Capital Surplus Accumulated Retain Earnings 13 81 509 13 80 1558 2161 121 20:40 LO2N 1620 Less treasury stock Total Owner's Equity 1539 Total Assets 3499 29.46 Total Liabilities and Owners Equity 3499 2946 Ammar Compute Inc. has also provided the following information: During the year the company raised RM18.000 in new long-term debt and retired RM 98.000 in long-term debt. The company also sold RM11.000 of new stock and repurchased RM 40,000 of stock. the company purchased RM 786.000 in fixed assets and sold RM 139.000 or fixed assets! Activate Windows 15 to Settiristo activate Win ne here to Ammar Computer Inc. Income Statement for the year ended 31" December, 2019 (RM in thousands) Sales 5000 Cost of goods sold Selling. General and Administrative expenses Depreciations Operating Income Other Income EBIT Interest Expenses Pretax Income Taxes Current Deferred Net Income Addition to retained earnings Dividends 3000 543 170 1287 48 1335 95 1240 386 109 495 745 533 212 Required: a. Prepare the financial statement of cash flows and the accounting statement of casti flows. (15 mark) b. Describe the strengths and weaknesses of Ammar Compute. Inc. cash flows. 15 marks) e. Compare which cash flow statement is more accurate in describing the cash flows of the company. 15 marks) b Activate Windows In light of your previour answers, comment on Ammar Computer Inc. expansion plans 10 marks)