1) Look at the Cash Flow Statement Survey. a. Which company(s) got an emergency loan although it was profitable? How much? (4 points) b. For each company you mentioned in (a), explain why it got an emergency loan. (8 points) c. How could each company you mentioned in (a) have avoided the emergency loan? (6 points) d. For the companies: Baldwin, Digby, Erie and Ferris, evaluate how well each company is managing its cash by looking at the following: (24 points) Ending cash position (BS) Net change in cash position (CF) Compare investment with financing (CF) Net Income (CF) Any huge cash outflow/inflow (CF) 2) Which company has the largest asset base? How big? (2 points) (Hint: look at the BS) 3) Evaluate the capital structure of the company you picked in (Q#2) above. Calculate the leverage ratio (Assets/Equity) and the percentage of equity to debt in the companys assets. Comment on your findings. (6 points) Hint: A company with too much debt (over 70% of assets) is too risky as it may not be able to pay back all of this debt and its interest. For banks, this company is a risky borrower very few banks will be willing to lend it and those that do will charge a very high interest rate to match the risk of the company. On the other hand, a company with too much equity (over 70% of assets) is at risk of being taken over (i.e. bought out by another company). The company is an attractive target for acquisition because there is an opportunity for whoever acquires this company to borrow debt easily using all the equity as collateral, and to use all of this borrowing to expand the company and make more profits. The fact that the current management is not making use of this opportunity indicates that current management is out of profitable growth ideas. If the company is acquired, the top management will normally be fired.

Balance Sheet Survey Cash Accounts Receivable Inventory Total Current Assets Andrews $0 $6,107 $13,187 $19,294 Baldwin $1,143 $5,764 $6,645 $13,553 Chester $0 $4,525 $10,038 $14,563 Digby $2,694 $5,941 $7,403 $16,039 Erie $6,545 $4,466 $3,734 $14,745 Ferris $1,585 $4,683 $2,974 $9,243 Plant and equipment Accumulated Depreciation Total Fixed Assets $30,540 ($9,043) $21,497 $31,000 ($9,227) $21,773 $45,300 (511,020) $34,280 $44,362 ($10,295) $34,067 $36,400 ($10,553) $25,847 $28,800 (59,227) $19,573 Total Assets $40,792 $35,326 $48,843 $50,106 $40,592 $28,816 Accounts Payable Current Debt Total Current Liabilities $5,819 $2,288 $8,107 $4,446 $0 $4,446 $3,393 $7,138 $10,531 $4,402 SO $4,402 $3,013 $0 $3,013 $3.462 $0 $3,462 Long Term Debt Total Liabilities $9,310 $17,417 $4,333 $8,779 $19,146 $29,677 $16,248 $20,650 $8,833 $11,846 $10,333 $13,796 Common Stock Retained Earnings Total Equity $4,797 $18,578 $23,375 $6,526 $20,020 $26,546 $4,023 $15,142 $19,165 $10,107 $19,348 $29,455 $5,823 $22,922 $28,745 $3,523 $11,497 $15,020 Total Liabilities & Owners Equity $40,792 $35,326 $48,843 $50, 106 $40,592 $28,816 Income Statement Survey Sales Variable Costs(Labor Material Carry) Contribution Margin Depreciation SGA(R&D, Promo, Sales, Admin) Other(Fees Writeoffs,TQM, Bonuses) EBIT Interest(Short term, Long term) Taxe Profit Sharing Net Profit FOUNDATION FAST TRACK Andrews $79,607 $61,226 $18,381 $2,036 $12,205 $42 $4,098 $1,373 Baldwin $70,126 $49,835 $20,291 $1,733 $10,818 $15 $7,725 $546 ,513 $93 $4,573 Chester $53,280 $36,377 $16,903 $2,853 $10,865 $397 $2,787 $3,123 ($118) $0 ($218) Digby $72,286 $49,480 $22,806 $2,957 $11,790 $836 $7,223 $1,709 $1,930 $72 $3,512 Erie $54,336 $35,264 $19,072 $2,327 $7,320 $50 $9,375 $966 $2,943 $109 $5,356 Ferris $56,982 $39,509 $17,473 $1,920 $13,468 $125 $1,959 $1,154 $282 $10 $513 Page 3 $35 $1,736 foundation Financial Summary Fast Track F121242 Round: 3 Dec. 31, 2023 Andrews Baldwin Chester Digby Erie Ferris $1,736 $4,573 ($218) $3,512 $5,356 $513 Cash Flow Statement Survey Cashflows from operating activities Net Income(Loss) Adjustment for non-cash items: Depreciation Extraordinary gains/losses/writeoffs Changes in current assets and liablilities Accounts payable Inventory Accounts Receivable Net cash from operations $2,036 $27 $1,733 SO $2,853 $0 $2,957 $0 $2,327 $0 $1,920 $0 $967 ($11,157) ($1,059) ($7,450) $387 ($5,057) ($380) $1,256 $51 (57,530) $529 (54,315) $1,569 (54,967) ($2,182) $891 $237 (51,843) ($553) $5,523 $1,320 (52,974) ($1,680) (5902) ($8,840) ($5,000) (513,200) ($16,714) (54,800) (51,600) Cash flows from investing activities Plant improvements(net) Cash flows from financing activities Dividends paid Sales of common stock Purchase of common stock Cash from long term debt issued Early retirement of long term debt Retirement of current debt Cash from current debt borrowing Cash from emergency loan S88 $0 $0 $0 $0 ($1,000) (5867) $0 $2,288 SO $0 ($1,000) $0 $0 ($867) $0 $0 $0 $700 $0 $7,248 $0 (5867) $1,000 $6,138 SO $7,284 SO $9,435 SO (5867) $0 SO $0 $0 $0 $1,000 $0 ($867) $0 $0 $0 $0 $0 $2,500 $0 (5867) $0 $0 Net cash from financing activities $421 ($1,867) $14,220 $15,852 $133 $1,633 Net change in cash position ($15,869) ($5,610) (3,295) $29 $857 (5869)