c. Holding the other two ratios constant, what debt-to-equity ratio would be necessary?

g r-: Solutions to S e l f - correction Problems Source and Use of Funds Statement for Serap-Jones, Inc.

(in thousands)

Sources Uses Funds provided by operations Net profit $172 Depreciation 189 Addition to fixed assets $474

$361 Increase, accounts receivable 182 Increase, accounts payable 214 Increase, accruals 88 Increase, inventories 251 Increase, bank borrowings 135 Decrease, cash -109 -

Total sources - Total uses $907 Statement of Cash Flows for Serap-Jones, Inc.

(in thousands)

Cash flows from operating activities:

Net earnings Adjustments to reconcile net earnings to cash provided by operating activities Depreciation 189 Changes in assets and liabilities Accounts receivable (182)

Inventories Accounts payable Accruals Cash flows from investing activities:

Investment in fixed assets ($474)

Cash flows from financing activities:

Increase (decrease) short-term borrowings -$135 Increase (decrease) in cash and cash equivalents ($109)

Cash and cash equivalents at beginning of year -140 Cash and cash equivalents at end of year -$ 31 418 Part IV Tools of Financial Analysis and Control