Cash flows case: indirect method). Horany Company has not yet prepared the statement of cash flows. The Balance sheet as of December 31, 2020, January 1, 2020 and the additional information regarding the statement of income and retained earnings for the year are presented below. Horany Company Comparative Balance Sheet (Dollars in Millions) Assets 12/31/2020 1/1/2020 Current Assets: Cash $ 49 $79 645 580 Account Receivables Inventory 660 615 1,274 Total Current Assets 1,354 1,515 1,466 765 641 Property, Plant, and Equipment Less Accumulated Depreciation Net Property, Plant, and Equipment Total Assets 750 825 $2,104 $2,099 $155 165 70 $390 620 Liability and Equity Current Liability: Account payable $250 Accrued Liability 190 Income tax payable 76 Total current Liability $516 Bonds payable 450 Total Liability 966 Stockholders' Equity: Common Stock 161 Retained earnings 977 Total Stockholders' Equity 1,138 Total Liability and Stockholders' Equity $2,104 Horany Income statement (Dollars in Millions) 1,010 161 928 1,089 $2,099 $3,600 2.550 1,050 875 Net Income Cost of goods sold Gross Margin Selling and administrative Expenses Net Operating Income Nonoperation items: Gain on sale of Equipment Income before Taxes 175 179 Income tax 63 Net Income $ 116 Horany also provided the following information: 1. The company sold equipment that had an original cost of $13 million and accumulated depreciation of $8 million. The cash proceeds from the sale were $8 million. The gain on the sale was $3 million. 2. The company did not issue any bonds during the year. 3. The company paid a cash dividend during the year. 4. The company did not complete any common stock transactions during the year. Required: 1. Assume that Horany has sales of $3,800, Net income of $135, and net cash provided by operating activities of $150 in the prior year. Prepare a memo that summarizes your interpretations of Horany's financial performance