5.5 In January 2002 Emanuele & Lollo Co undertakes a four-year project at a contracted price of EUR 100 million that will be billed in four equal annual instalments of EUR 25 million each year over the project’s life. The project is expected to cost EUR 90 million. Over the life of the project, the billings, cash receipts and cash outlays related to the project are:

Amounts in thousands of euro 2002 2003 2004 2005 Billings 25,000 25,000 25,000 25,000 Cash received 20,000 27,000 25,000 28,000 Cash paid 18,000 36,000 27,000 9,000

(a) Show the cash flows from the project each year.

(b) Prepare the income statement for each year.

(c) Prepare the balance sheet at the end of each year.

(d) Calculate some key financial ratios.