1.Salza Technology Corporation increased its sales from $375,000 in 2015 to $450,000 in year 2016 as is shown in the firm's income statements presented below.LeAnn Sands, chief executive officer (CEO) and founder of the firm expressed concern that the cash account and the firm's marketable securities declined substantially between 2015 and 2016.Salza's complete balance sheets are also shown below.Ms. Sands is seeking your assistance in the preparation of a statement of cash flows for Salza Technology.

SALZA TECHNOLOGY CORPORATION

Annual Income Statements as of December 31 (in $ Thousands)

2015

2016

Net sales

$375

$450

Less: Cost of goods sold

-225

-270

Gross profit

150

180

Less: Operating expenses

-46

-46

Less: Depreciation

-25

-30

Less: Interest

- 4

-4

Income before taxes

75

100

Less: Income taxes

- 20

-30

Net income

$55

$70

Cash dividends

$17

$20

Balance Sheets as of December 31 (in $ Thousands)

2015

2016

Cash

$ 39

$ 16

Accounts receivable

50

80

Inventories

151

204

Total current assets

240

300

Gross fixed assets

200

290

Less accumulated depreciation

-95

-125

Net fixed assets

105

165

Total assets

$345

$465

Accounts payable

$ 30

$ 45

Bank loan

20

27

Accrued liabilities

10

23

Total current liabilities

60

95

Long-term debt

15

15

Common stock

85

120

Retained earnings

185

235

Total liabilities and equity

$345

$465

A.Make a statement of cash flows for 2016 for the Salza Technology Corporation.

Cash Flow Statement

2016

Cash from Operating Activities

Net income

Deprecation

Increase in accounts receivable

Increase in inventories

Increase in accounts payable

Increase in accrued liabilities

Net from Operating Activities

Cash from Investing Activities

Increase in gross fixed assets

Cash from Financing Activities

Increase in bank loan

Increase in common stock

Cash dividends paid

Net from financing Activities

Total net Cash Increase (decrease)

Cash at Beginning of Period

Total net Cash Increase (decrease)

Cash at End of Period

B.Provide a brief description of what happened in terms of cash flows (both inflows and outflows) for Salza between years 2015 and 2016.

C.Use your calculations from Part A for cash flows from operating and investing activities to indicate the extent to which Salza was building or burning cash in 2016.

D.Convert the 2016 annual cash build or cash burn to a monthly rate.If cash flow activities relating to operations and investing for 2016 continue into 2017, indicate: (1) how long it will be before Salza runs out of cash (if Salza is burning cash), or (2) the expected 2017 year-end cash account balance if Salza is building cash.Assume no changes in cash flows from financing activities in 2017 for calculation purposes.