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2. In light of your discussion in the previous question Cash Flows and Financial Statements at Sunset Boards, Inc. 50 CHAPTER CASE PART 2 Understanding Financial Statements and Cash Flow 3 2015 2016 $203,963 $257.528 29.429 31.257 57.576 12.530 40.110 65,076 14,345 52,351 n Februa Cost of goods sold Cash Depreciation Interest expense Selling and administrative expenses Accounts payable Net fixed assets Sales Accounts receivable Notes payable Long-term debt Inventory New equity Therley Harley-D HarleyDav 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 company's financial re- cords are not well maintained The initial investment in Sunset Boards was pro- vided by Tad and his friends and family. Because the ini- tial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad. But thanks to word of mouth among professional surf- ers, sales have picked up recently, and Tad is consider- ing 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. Tad's expansion plans require a significant invest- ment, which he plans to finance with a combination of additional funds from outsiders plus some money bor. rowed 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 Jameson Reid to evaluate the performance of the com pany over the past year. After rooting through old bank statements, sales re. ceipts, tax returns, and other records, Jameson has as sembled the following information: 52,015 254,017 400.111 20.854 23.708 128,218 43,884 0 57,70 316,825 487,712 27,050 25,885 143,97: 60.222 24.192 that invest earned by ing to pay Systems CC earned by were stock actually) the averag contains 50 Sunset Boards currently pays out 50 percent of net is come as dividends to Tad and the other original inves- tors, and has a 20 percent tax rate. You are Jameson's assistant, and he has asked you to prepare the following: 1. An income statement for 2015 and 2016. 2. A balance sheet for 2015 and 2016. 3. Operating cash flow for each year. 4. Cash flow from assets for 2016. 5. Cash flow to creditors for 2016. 6. Cash flow to stockholders for 2016. States, had in this rega As we pay so muc Harley Dav profitability operating ir this chapter The PE QUESTIONS are a wide 1. How would you describe Sunset Boards' cash flows for 2016? Write a brief discussion cial position what do you think about Tad's expansion plans? a bit to say Everyb characterist tio. Market Please visit