Why does Mr. Gilbert have to borrow money to support his business? (a) A useful beginning to the analysis is the preparation of a Sources and Uses (or Fund Flow) Statement for the period 2011 though 2014s rst quarter. The Sources and Uses Statement helps you get a quick (but rough) picture of where funds are coming from (Sources) and where they are going (Uses). To construct the statement: i. Compare Gilbert Lumbers Balance Sheet in 2011 and 2014 (Q1) ii. Classify each Asset that has increased (decreased) as a Use (Source) iii. Classify each Liability that has increased (decreased) as a Source (Use) What are the Gilbert Lumber Companys main Sources and Uses of funds? (b) What nancial and operational ratios can be informative about Gilberts need for funds? Now that you have a better understanding of Gilberts business, forecast his future funding needs: 5. Estimate Gilberts funds needs for 2014 by doing a pro forma Income Statement and Balance Sheet. Assume 2014 sales at $3.6 million and AP = 10 days of purchases. 6. Do you agree with Mr. Gilberts conclusion that a $465,000 line of credit would more than meet his foreseeable funding needs?