Cash Flow Statement

The Cash Flow Statement examines what happened in the Cash Account during the year. Cash injections appear as positive numbers and cash withdrawals as negative numbers. The Cash Flow Statement is an excellent tool for diagnosing emergency loans. When negative cash flows exceed positives, you are forced to seek emergency funding. For example, if sales are bad and you find yourself carrying an abundance of excess inventory, the report would show the increase in inventory as a huge negative cash flow. Too much unexpected inventory could outstrip your inflows, exhaust your starting cash and force you to beg for money to keep your company afloat.

Cash Flows from Operating Activities:	2023	2022
Net Income (Loss)	$13,696	$2,671
Depreciation	$17,647	$17,647
Extraordinary gains/losses/writeoffs	($951)	$0
Accounts Payable	($1,713)	$1,130
Inventory	$5,039	($11,331)
Accounts Receivable	($922)	($380)
Net cash from operations	$32,795	$9,736
Cash Flows from Investing Activities:
Plant Improvements	$0	($30,503)
Cash Flows from Financing Activities:
Dividends Paid	($11,639)	$0
Sales of Common Stock	$0	$13,275
Purchase of Common Stock	$0	$0
Cash from long term debt	$0	$12,525
Retirement of long term debt	($10,212)	$0
Change in current debt (net)	($236)	($12,681)
Net cash from financing activities	($22,088)	$13,119
Net change in cash position	$10,708	($7,648)
Closing cash position	$53,780	$43,073

Balance Sheet

DEFINITIONS: Common Size: The common size column simply represents each item as a percentage of total assets for that year. Cash: Your end-of-year cash position. Accounts Receivable: Reflects the lag between delivery and payment of your products. Inventories: The current value of your inventory across all products. A zero indicates your company stocked out. Unmet demand would, of course, fall to your competitors. Plant & Equipment: The current value of your plant. Accum Deprec: The total accumulated depreciation from your plant. Accts Payable: What the company currently owes suppliers for materials and services. Current Debt: The debt the company is obligated to pay during the next year of operations. It includes emergency loans used to keep your company solvent should you run out of cash during the year. Long Term Debt: The company's long term debt is in the form of bonds, and this represents the total value of your bonds. Common Stock: The amount of capital invested by shareholders in the company. Retained Earnings: The profits that the company chose to keep instead of paying to shareholders as dividends.

ASSETS			2023	2022
			Common Size
Cash	$53,780		23.5%	$43,073
Accounts Receivable	$14,830		6.5%	$13,908
Inventory	$9,561		4.2%	$14,600
Total Current Assets		$78,171	34.2%	$71,581
Plant & Equipment	$264,700		115.7%	$264,700
Accumulated Depreciation	($114,009)		-49.8%	($96,362)
Total Fixed Assets		$150,691	65.8%	$168,338
Total Assets		$228,863	100.0%	$239,919
LIABILITIES & OWNERS' EQUITY
Accounts Payable	$8,045		3.5%	$9,759
Current Debt	$31,849		13.9%	$32,085
Long Term Debt	$92,928		40.6%	$104,091
Total Liabilities		$132,822	58.0%	$145,935
Common Stock	$54,953		24.0%	$54,953
Retained Earnings	$41,087		18.0%	$39,031
Total Equity		$96,040	42.0%	$93,984
Total Liab. & O. Equity		$228,863	100.0%	$239,919

2023 Income Statement

(Product Name:)	Deal	Dino	Don	Dug	Na	Na	Na	Na	2023 Total	Common Size
Sales	$34,108	$34,483	$54,468	$57,374	$0	$0	$0	$0	$180,433	100.0%
Variable Costs:
Direct Labor	$3,594	$3,670	$11,187	$10,366	$0	$0	$0	$0	$28,817	16.0%
Direct Material	$15,071	$15,617	$21,324	$22,093	$0	$0	$0	$0	$74,105	41.1%
Inventory Carry	$124	$142	$443	$438	$0	$0	$0	$0	$1,147	0.6%
Total Variable	$18,789	$19,429	$32,954	$32,897	$0	$0	$0	$0	$104,069	57.7%
Contribution Margin	$15,319	$15,054	$21,514	$24,476	$0	$0	$0	$0	$76,364	42.3%
Period Costs:
Depreciation	$4,907	$5,520	$3,293	$3,927	$0	$0	$0	$0	$17,647	9.8%
SG&A: R&D	$446	$446	$966	$966	$0	$0	$0	$0	$2,824	1.6%
Promotions	$1,300	$1,300	$1,300	$1,300	$0	$0	$0	$0	$5,200	2.9%
Sales	$1,600	$1,600	$1,400	$1,400	$0	$0	$0	$0	$6,000	3.3%
Admin	$369	$373	$589	$621	$0	$0	$0	$0	$1,952	1.1%
Total Period	$8,621	$9,239	$7,549	$8,213	$0	$0	$0	$0	$33,622	18.6%
Net Margin	$6,698	$5,816	$13,966	$16,263	$0	$0	$0	$0	$42,742	23.7%

Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D department expenditures for each product. Admin: Administration overhead is estimated at 1.5% of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for each product. Other: Charges not included in other categories such as Fees, Write Offs, and TQM. The fees include money paid to investment bankers and brokerage firms to issue new stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit sharing.

Other	$4,702	2.6%
EBIT	$38,040	21.1%
Short Term Interest	$4,109	2.3%
LongTerm Interest	$12,431	6.9%
Taxes	$7,525	4.2%
Profit Sharing	$280	0.2%
Net Profit	$13,696	7.6%

In the month of March the Digby Corporation received and delivered orders of 189,000 units at a price of $15.00 for revenue of $2.835mil for their product Deal. Digby uses the accrual method of accounting and offers 30 day credit terms. By the end of May Digby had collected payments of $2.835mil for the March deliveries. How much of the collected $2.835mil should Digby show on the March 31st income statement and how much on the May 31st income statement? Select: 1 Save Answer $0.936mil in March; $1.899mil in May $2.835mil in March; $0 in May $1.417mil in March; $1.417mil in May $0 in March; $2.835mil in May