Ted Tooney has operated a small service company for several years. The following information is from the financial statements prepared by Ted€™s accountant.

REQUIRED:
Assume that you have some capital to invest and that Ted asked you to consider making an equity investment in his company. Review the financial statements and describe how you would respond to Ted€™s request. Support your recommendation with calculations.

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2017 2016 Balance Sheet $ 9,000 $ 8,000 Current assets Long-term assets 18,000 15,000 Current liabilities 7,000 4,000 Long-term liabilities 9,000 7,000 Common stock 9,000 9,000 Retained earnings 2,000 3,000 Income Statement $92,000 $89,000 Revenues Expenses 72,000 78,000 Statement of Cash Flows Net cash flow from operating activities $12,000 $15,000 (5,000) Net cash flow from investing activities (8,000) Net cash flow from financing activities (5,000) $ (1,000) (8,000) $ 2,000 Change in cash balance Beginning cash balance 5,000 3,000 $ 4,000 $ 5,000 Ending cash balance