Following are financial statements for Sentec Inc., a distributor of electrical fixtures, for 2008, 2009, and 2010.

a. Prepare Sentec Inc.’s managerial balance sheets on December 31, 2008, 2009, and 2010.

b. Prepare Sentec’s cash-flow statements for 2009 and 2010 according to the direct method.

c. What accounts for the change in the firm’s net operating cash flow over the two-year period?

d. In 2010, firms in the same business sector as Sentec Inc. had an average collection period of thirty days, an average payment period of thirty-three days, and an inventory turnover of eight days. Suppose that Sentec Inc. had managed its operating cycle like the average firm in the sector. On December 31, 2010, what would its working capital requirement have been? Its net operating cash flow in year 2010?

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Income Statements (in thousands) 2008 2009 2010 $24,300 $22,100 17,600 3,750 $31,600 Cost of goods sold Selling, general, and administrative expenses 4,000 100 900 5,000 150 1,350 preciation expense Earnings before interest and tax 650 Net interest expense 1,090 430 660 Earnings before tax expense 320 $ 180 tax 460 Dividends Balance Sheets (in thousands) December 31 2008 December 31, 2009 December 31 2010 Cash Accounts receivable Inventories Prepaid expenses Net fixed assets Total assets Short-term debt Accounts payable Accrued expenses Long-term debt Owners' equity Total liabilities and owners' equity 2,730 2,800 3,200 4,300 1,200 S7,330 1,450 10,250 S 1,900 2,050 $7,950 1,600 260 200 4,130 S7,330 4,850 S10,250 $7,950