3.) Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the companys financial records are not well maintained. The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors havent required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his sticks (surfer lingo for boards) to other sellers. Tads expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the following information:

Sunset Boards currently pays out 40 percent of net income as dividends to Tad and the other original investors, and it has a 21 percent tax rate. You are Christinas assistant, and she has asked you to prepare the following:

i.) An income statement for 2017 and 2018.

ii.) A balance sheet for 2017 and 2018.

iii.) Operating cash flow for each year.

iv.) Cash flow from assets for 2018.

v.) Cash flow to creditors for 2018

vi.) Cash flow to stockholders for 2018

Once you have the above statements read, please answer the following questions:

A.) How would you describe Sunset Boardss cash flows for 2018? Write a brief discussion.

B.) In light of your discussion in the previous question, what do you think about Tads expansion plans?

Cost of goods sold Cash Depreciation Interest expense Selling and administrative expense Accounts payable Net fixed assets Sales Accounts receivable Notes payable Long-term debt Inventory New equity 2017 $255,605 36,884 72,158 15,687 50,268 26,186 318,345 501,441 26,136 29,712 160,689 50,318 2018 $322,742 55,725 81,559 17,980 65,610 44,318 387,855 611,224 33,901 32,441 175,340 67,674 19,500 Cost of goods sold Cash Depreciation Interest expense Selling and administrative expense Accounts payable Net fixed assets Sales Accounts receivable Notes payable Long-term debt Inventory New equity 2017 $255,605 36,884 72,158 15,687 50,268 26,186 318,345 501,441 26,136 29,712 160,689 50,318 2018 $322,742 55,725 81,559 17,980 65,610 44,318 387,855 611,224 33,901 32,441 175,340 67,674 19,500