8 jo 1 Case Study 01: Cash Flows and Financial Statements at Sunset Boards, Inc. Sunt Boards is a small company that manufactures and sell surfboards in Malib.Tad Marks the founder of the company is in charge of the design and sale of the surfboards, but his backend is in surfing met business. As a result the company's financiarecords are not well maintained The initial investment in Sunset Beards was provided by Tad and his friends and family. Because the initial wes t was atively 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 mouthmone professional surfers, les have picked up recently, and Tad is considering a major expansion. His plans include opening another surfheard store in Hawail, as well as supplying his sticks (surferlingo for boards) to other sellers Tad's expansion plans require a s ticant investment, which the plans to finance with a combination of additional funds from outsiders plus some money borrowed from bankes Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the wing of this investors. Tad has hired financial analyst James Reid to evaluate the performance of the company over the past year Alter rooting through old bank statements, sales receipts, tax returns, and other records, Jameson has assembled the following information Contol good old $2003 5257528 Long-term det Sunset Boards currently pays out 50 percent of net income as dividends to Tad and the other original investors, and has a 20 percent tax rate. You are Jameson's assistant and he has asked you to prepare the following 1 2 An income statement for 2015 and 2016 A balance sheet for 2015 and 2016 Operation cash flow for each year Cash flow from assets for 2016 Cash flow to creditors for 2016 Cash flow testhelder for 2016 5 6 QUESTIONS: How would you describe Sunset Boards' cash flows for 2016? Write a brief discussion is light of your discussion in the previous question what do you think about Tad expansion plans? 2