Cash Flows and Debt Restructuring - Part 1 [WLOs: 1, 2, 3] [CLOs: 1, 2, 5]

Prior to beginning work on this assignment, read Case 6-2 and Case 17-2 and review the Cash Flow Student Input Sheet.xlsx download. Your cash flow statement should be completed using the Cash Flow Student Input Sheet. Several book numbers have been changed, so use the column on the Cash Flow Student Input Sheet that corresponds to your class start date.

Complete the Cash Flow Student Input Sheet, and then write a five- to seven-page paper completing Case 17-2 and Case 6-2. Submit both the final paper cash flow input sheet and the final paper using the instructions provided below.

Your final paper should have the following paragraph headings and address the corresponding directives:

Case 17-2

Statement of Cash Flows for the year ended December 31, 2017

Prepare a statement of cash flows for Lucky Lady Inc. using the income statement for the year. ended December 31, 2017, as well as the balance sheets as of December 31, 2017 and December 31, 2016.

Borrowing and Repayment

Show separately any borrowing or repayment as a financing inflow or outflow.

Explain the changes to each asset and each liability account that affected Lucky Ladys cash flows during 2017.

Case 6-2

Collateral

Suggest what type and amount of collateral should be required.

Interest Rate

Determine if a higher interest rate be charged with rationale.

Payment Schedule

Propose what changes should be made to the payment schedule.

Minimum Net Worth, Working Capital, and Interest

Recommend the new minimum net worth, working capital, and interest coverage limits that lenders should set.

Resume Payment of Dividend

Advise Prudential and First Florida as to a course of action if the company were to ask permission to resume payment of its $0.12 per share dividend, which was suspended in 2016.