Big Rock Brewery Inc. Big Rock Brewery Inc. is a leading Canadian craft brewer that produces premium, all natural craft beers. Its statements of cash Page 305 flows for fiscal years 2018, 2017 and 2016 are shown below. BIG ROCK BREWERY INC. Consolidated Statements of Cash Flows For the Years Ended December 30 (in thousands of Canadian dollars) 2018 2017 2016 OPERATING ACTIVITIES $ 360 $ (1.020) S (451) 3.201 2.942 2.359 Net Income (los) for the year Items not affecting cash: Depreciation and amortization Loss (pain) on sale of assets Share based payments Lease incentive Amortized debt issue costs (29) 20 1651 68 459 385 32 13 Deferred income tax expense (recovery) 333 20 Change in non-cash working capital related to operations Accounts receivable (220) (352) 927 (418) 158 (209) 41 145 Inventory Prepaid expenses Accounts payable and accrued liabilities Income taxes payable Share based payment liabilities (119) 1,209 67 (464) (160) 197 (51) (19) 85) Cash provided by operating activities 4,608 1.414 3.54 FINANCING ACTIVITIES (330) (323) 1.000 2.467 Repayment of finance lease Proceeds from long term debt Increase (decrease) in bank indebtedness Repayment of long term debit Proceeds from issuance of shares 19 (2.759) 1.596 (403) (3557 58 (654) (1.851 1.708 Cash provided by used in financing activities di (2,013) (1,690) (7.691) (348 (36) INVESTING ACTIVITIES Purchase of property, plant, and equipment Purchase of intangibles Proceeds from sale of property, plant, and equipment Cash provided by (used in) investing activities Net increase (decrease) in cash Cash, beginning of year Cash, end of year (391) 2,479 141 143 (2,220) 398 (7.584) 1.734 (39) (333) 168 207 540 $ 1,902 $ 168 $ 207 Supplemental cash flow information: Interest paid Taxes paid (recovered) $ 314 $ 327 $ 357 (226) 57 Reywirelt 1. The cash flows from operating activities show that depreciation and amortization are added to net income (ross) for the year. Is depreciation and amortization a source of cash? Explain, 2. Was the cash collected from customers during fiscal year 2018 higher or lower than Big Rock's sales revenue for that year? Explain Required: 1. The cash flows from operating activities show that depreciation and amortization are added to net income (loss) for the year. Is depreciation and amortization a source of cash? Explain. 2. Was the cash collected from customers during fiscal year 2018 higher or lower than Big Rock's sales revenue for that year? Explain 3. Did Big Rock expand during 2017 and 2018? If so, how did the company pay for its expansion Explain 4. Compute and analyze Big Rock's quality of earnings ratio capital expenditures ratio and free cash flow for 2017 and 2018 5. Analyze the company's pattern of cash flows from operating, investing, and financing activities over the three years. What conclusion can you draw from the changing pattern of cash flows? Explain. 6. Obtain a copy of Big Rock's statement of cash flows for the year 2019 through the company's website (www.bigrockbeer.com Pape 306 or the SEDAR service (www.sedar.com). Did the company's cash flow situation in 2019 improve or deteriorate relative to previous years! Explain 7. As a potential investor in Big Rock's shares, what additional information would you need before making your decision as to whether or not to invest in this company's shares