Ben Tools, Inc.€™s comparative balance sheets for December 31, 2014 and 2013, follow.

During 2014, the company had net income of $96,000 and building and equipment depreciation expenses of $80,000 and $60,000, respectively. It amortized intangible assets in the amount of $20,000; purchased investments for $116,000; sold investments for $150,000, on which it recorded a gain of $34,000; issued $240,000 of long-term bonds at face value; purchased land and a warehouse through a $320,000 mortgage; paid $40,000 to reduce the mortgage; borrowed $60,000 by issuing notes payable; repaid notes payable in the amount of $180,000; declared and paid cash dividends in the amount of $36,000; and purchased treasury stock in the amount of $20,000.

Required
1. Using the indirect method, prepare a statement of cash flows for Ben Tools.
2. Why did Ben Tools experience a decrease in cash in a year in which it had a net income of $96,000? Discuss and interpret.
3. Compute and assess cash flow yield and free cash flow for 2014. Why is each of these measures important in assessing cash-generatingability?

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Ben Tools, Inc. Comparative Balance Sheets December 31, 2014 and 2013 2014 2013 Assets Cash Accounts receivable (net) Inventory Prepaid expenses Long-term investments S257,600 738,800 960,000 14,800 440,000 361,200 1,200,000 (240,000) 305,600 758,800 800,000 26,800 440,000 321,200 920,000 (160,000) 480,000 Building Accumulated depreciation- building Equipment Accumulated depreciation- equipment Intangible assets Total assets (116,000) 20,000 S4,116,400 40,000 3,876400 Liabilities and Stockholders' Equity Accounts payable Notes payable (current) Accrued liabilities Mortgage payable Bonds payable Common stock Additional paid-in capital Retained earnings Treasury stock Total liabilities and stockholders'equity S 470,800 40,000 10,800 1,080,000 1,000,000 1,300,000 80,000 254,800 (120,000) $4,116,400 S 660,800 160,000 20,800 800,000 760,000 1,300,000 80,000 194,800 (100,000) 3,876,400