Using Cash Flow Information The operating section of Jelic Custom Manufacturing Company’s cash flow statement is shown at the bottom of the page.

Using this information, answer the following questions.
If a question cannot be answered from the information given, indicate why.

a. Have accounts receivable increased or decreased this year?

b. If Jelic has had only a single bond issue outstanding during the year, are those bonds reported at an amount above or below par value in the company’s year-end balance sheet? How do you know?

c. Does the company appear to be more or less inclined to prepay expenses than in the past? Does this help or hurt its cash position? Explain.

d. Has inventory increased or decreased this year? Explain why this affects cash.

e. Compared with last year, does the company seem to be relying more or less heavily on trade credit to finance its activities?

f. Has depreciation expense increased from last year?
g. If you were a potential creditor of Jelic, do you see any warning signs in the cash flow statement that you would want to investigate further before lending the company money? Explain.
h. Jelic has $2,000,000 of bonds maturing on January 12, 2002. Jelic does not have a bond sinking fund established to pay off the bonds. Do you think Jelic will be able to meet its obligation to pay off the bonds without additional long-term financing? Discuss.

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WHITE COMPANY CASH FLOW STATEMENT YEAR ENDING DECEMBER 31, 2000 Cash flows from operations: Net income Adjustment for depreciation Adjustment for gain on sale of operating assets Adjustment for change in current assets other than cash Adjustment for change in current liabilities Cash provided by operations Cash flows from investing activities: Purchase of operating assets Sale of operating assets Cash used in investing activities Cash flows from financing activities: Issuance of capital stock Retirement of bonds Dividends paid Cash provided by financing activities Increase in cash $(1,200,000) 300,000 $ 2,000,000 (1,300.000) (250,000) $ 444,000 230,000 (14,000) (120,000) 80,000 $ 620,000 (900.000) 450.000 $ 170.000