CASH FLOWS AT EAST COAST YACHTS

Because of the dramatic growth at East Coast Yachts, Larissa decided that the company should be reorganized

as a corporation $($see our Chapter $1$ Closing Case for more detail$).$ Time has passed and, today, the company is

publicly traded under the ticker symbol "ECY".

Dan Ervin was recently hired by East Coast Yachts to assist the company with its short$-$term financial plan$-$

ning and also to evaluate the company's financial performance. Dan graduated from college five years ago

with a finance degree, and he has been employed in the treasury department of a Fortune $500$ company since

then.

The company's past growth has been somewhat hectic, in part due to poor planning. In anticipation of

future growth, Larissa has asked Dan to analyze the company's cash flows. The company's financial state$-$

ments are prepared by an outside auditor. Nearby you will find the most recent income statement and the

balance sheets for the past two years.

Larissa has also provided the following information. During the year, the company raised $$36$ million in new

long$-$term debt and retired $$20\mathrm{.}3$ million in long$-$term debt. The company also sold $$21\mathrm{.}8$ million in new stock

and repurchased $$32\mathrm{.}08$ million. The company purchased $$53\mathrm{.}5$ million in fixed assets and sold $$5\mathrm{.}046$ millcy

in fixed assets.

Larissa has asked Dan to prepare the financial statement of cash flows and the accounting statement of

cash flows. She has also asked you to answer the following questions:

How would you describe East Coast Yachts' cash flows?

Which cash flows statement more accurately describes the cash flows at the company?

In light of your previous answers, comment on Larissa's expansion plans.