COMFY HOME COMPANY

As of December 31, 2017

in US$ '000

Current Assets Current Liabilities

Cash $110 Current portion of bank loan $95

Accounts receivable $140 Wages payable $60

Inventories $310 Accounts Payable $90

Prepaid expenses** $25 Deferred revenue and gift cards* $15

Total Current Assets $585 Total Current Liabilities $260

Buildings and property $450 Bank Loan $300

Leasehold Improvements $120

(Accumulated Depreciation) $(154) Owners' equity $250

Net $416 Retained earnings $191

Total Assets $1,001 Total liabilities and owners' equity $1,001

COMFY HOME COMPANY COMFY HOME COMPANY COMFY HOME COMPANY

Balance Sheet Income Statement Statement of Cash Flows

As of December 31, 2018 For the twelve months ending December 31, 2018 For the twelve months ending December 31, 2018

in US$ '000 in US$ '000 in US$ '000

Current Assets Current Liabilities Total Revenue $1,598

Cost of Goods Sold $958

Cash $129 Current portion of bank loan $55 Gross Profit $640

Accounts receivable $310 Wages payable $109 Wages $195

Inventories $358 Accounts Payable $192 Selling expenses $48

Prepaid expenses $33 Deferred revenue and gift cards $13 Administrative expenses $93

Insurance expense $39

Depreciation expense $70

Total Current Assets $830 Total Current Liabilities $369 Operating Profit $195

Interest $27

Buildings and properties $455 Bank Loan $248 Taxes (21%) $35

Leasehold Improvements $130 Net Income $133

(Accumulated Depreciation) $(224) Owners' equity $250

Net $361 Retained earnings $324

Total Assets $1,191 Total liabilities and owners' equity $1,191

Increase/decrease in Cash

Cash, ending balance $129

Please consider Comfy Home's business lifecycle and answer the following:

a. Based only on the Cash Flow Profile of Comfy Home, which of the following stages of the business lifecycle do you think Comfy Home is in?

i. Startup / Fast Growing

ii. Profitable / Growing

iii. Mature / Steady State

iv. In Decline

b. Assume you are the owner of Comfy Home. Based on the stage of the business lifecycle Comfy Home is in and its statement of cash flows, describe, in detail, what your top 2-3 concerns would be with regards to the company's cash flow.

Please explain your concerns and provide possible actions the Company could take to alleviate those concerns.