5 000 000 3 000 000 2 000 000 Sales COGS Gross Profits Operating Expenses selling expenses general & admin. expenses lease expenses depreciation expense total operating expenses Operating Profits Interest expense Net Profit Before Taxes Taxes (30%) Net Profit After Taxes Preferred stock dividends Earnings Available for Common Stockholders Common stock dividends Retained earnings 200 000 200 000 100 000 100 000 600 000 1 400 000 200 000 1 200 000 360 000 840 000 40 000 800 000 200 000 600 000 2014 2013 Assets Current assets Cash Account receivable Inventory Total Current Assets Total Gross Fixed Assets Accumulated depreciation Net fixed assets Total Assets 1 000 000 600 000 400 000 2 000 000 2 100 000 900 000 1 200 000 3 200 000 500 000 500 000 500 000 1500 000 2 000 000 800 000 200 000 2700 000 Liabilities and Stockholders' Equity Current Liabilities Account payable Notes payable Accruals Long-term Debt Total Liabilities 200 000 200 000 ol 300 000 300 000 ol 000 000 1600 000 1 100 000 1 500 000 Preferred Stock Common Stock (400,000 shares) Retained Earnings Total stockholders' equity 400 000 400 000 900 000 1700 000 400 000 400 000 300 000 100 000 Total Liabilities and Stockholders' Equity 3 200 000 2 700 000 Cash Flow from Operating Activities Net profit after taxes + Depreciation for the year + Decrease in account receivable + Decrease in inventory + Increase in accounts payable + Increase in accruals Cash provided by operating activities Cash Flow from Investment Activities + Decrease in gross fixed assets + Decrease in equity investment in other firms Cash provided by investment activities Cash Flow from Financing Activities + Increase in notes payable + Increase in long-term debt + Changes in stockholders' equity (not including retained earnings) - Dividends paid (preferred and common) Cash provided by financing activities Net increase in cash and marketable securities